Serbian Finance Minister Dusan Vujovic has urged investors to come to the country as part of an ongoing programme of reform and privatisation, to “see for themselves that we are a serious partner that is taking big steps”.

Speaking at the Western Balkans Investment Summit on February 22 at the European Bank for Reconstruction and Development’s London headquarters, Vujovic stressed that Serbia has “improved the business environment and achieved much in the field of encouraging investments”.

His appearance comes at a time when the Serbian government is aiming to liquidate or privatise a swathe of state-owned enterprises (SOEs) as part of a wider drive to open up the country’s economy and shake off decades of Soviet and post-Yugoslav-war corruption and economic mismanagement.

“We inherited an economy that was a disaster in terms of its growing fiscal deficit, in terms of its financial discipline and in terms of its overall environment for business,” Vujovic told an audience of over 300. "Among the structural issues that are part of our [reform] programme, privatisation is the biggest.” 

Serbia’s continued access to a €1.2bn International Monetary Fund loan, brokered in February 2015, is heavily dependent on Serbia following through on a raft of agreed reforms, including the privatisation or restructuring of hundreds of SOEs, the losses of which alone cost Serbia €690mn, or more than 2% of GDP, in 2013.

“When I took office there were 500-plus companies with pending privatisation plans needing to be resolved. These were companies in distress or in debt agencies for one, two or, for some of them, 10 years. You cannot have the flu for 10 years: you either die or you survive. These companies were kept on life support devices, which meant flows from the budget,” Vujovic said.

Of over 500 SOEs in line for privatisation, restructuring or liquidation, the vast majority are likely to be dissolved, with 17 strategic companies to be the focus of state efforts, which will aim to ready them for privatisation by the end of 2016.

“We have 17 large companies left from the pool of 500 which we are treating individually. We will complete [the privatisation of] seven by the end of this year and the remaining 10 by the end of May,” Vujovic explained.

The minister spoke of the confused investment landscape in Serbia, in which there are some cities “with more demand for investment than can be provided locally,” and others “that nobody will touch: enclaves of failed production, huge over-employment, old attitudes and the wrong approach to privatisation”.

Vujovic also, albeit indirectly, pointed to the ingrained system of patronage and clientelism that led to many Serbian SOEs becoming uncompetitive, describing “collusion between workers and management” as a barrier to successful attempts to privatise. Normally, management will defend capital and the owners from workers and anybody else. In Serbia, as a remnant of the old socialist system, workers and managers will get together to stop, obstruct or derail the process of privatisation, he said.