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Serbia, World Bank agree on 75-mln-USD result-based loan

Xinhua, May 17, 2016 Adjust font size:

Serbia signed a new contract with the World Bank (WB) on Monday in Belgrade for a loan worth 75 million U.S. dollars for supporting the country's reforms.

The contract for financing the "Program for the results in the modernization and optimization of public administration" was signed between Tony Verheijen, World Bank Country Manager for Serbia and Serbian Finance Minister Dusan Vujovic in Belgrade.

It aims to support the reforms in public sector and state finance that the country will use after it fulfills the agreed goals of cutting the number of employees in the public sector and restructuring public companies and institutions.

According to the press release of the World Bank, the program relies on the Public Administration Reform Strategy and the Action plan for its implementation, which the Serbian government adopted in 2014, with focuses on improving control over the employment in public sector and restructuring institutions.

Verheijen said that the reforms will reduce the pressure of public sectors on the budget, and create better conditions for social services.

"With the improvement of the business climate and the restructuring of public enterprises, public sector reform needs to create space for the faster development of the private sector and job creation, but also to ensure the readiness of Serbia to join the EU," said Verheijen.

According to the press release, the World Bank, for the first time in the Western Balkans uses the instrument called Program-for-Results Financing (PforR), which is a direct financial support to a program conducted in some country using a country's own institutions and processes, and linking disbursement of funds directly to the achievement of specific program results.

Since the program was created in 2012, there are 39 approved PforR operations totaling 9.4 billion U.S. dollars of Bank financing and supporting 49.9 billion U.S. dollars of government programs, according to WB data.

It also said in the release that this is the first such project financed jointly in one country by the World Bank and the European Union, connecting both EU Sector Budget Support within the Instrument for pre-accession assistance and WB result-based loan.

"Serbia will be able to use the loan only after it fulfills the agreed goals", Verheijen said, adding that the project shows the readiness of the World Bank to support on-going reforms in the public sector in Serbia. Endit