USAID’s Business Enabling Project Quarterly Report: Third Quarter 2013

The project aims to improve the competitiveness of the Serbian economy and its private sector businesses by providing technical assistance, training, and other support to improve the business enabling environment, maintain macroeconomic stability, and further develop financial markets. The project consists of three major components: Component 1, Business Regulation and Economic Governance, streamlines laws, regulations, and institutions; improves regulators' capacity to implement laws; and improves analysis and public-private dialogue. Component 2, Macroeconomic Policy and Public Financial Management, helps the Government implement new budget and fiscal responsibility laws, improve budgeting, increase public disclosure and transparency, strengthen public debt management, and improve economic analysis and forecasting. Component 3, Financial Market Development, improves regulatory frameworks for non-bank institutions, develops capacity to strengthen and expand capital markets, and improves conditions for debt market development. During the third quarter of 2013, notable activities included the development of the first draft of a new Law on Inspections, which will introduce a risk-based system, prevention rather than sanctioning, and transparency and coordination of inspections. BEP and the Ministry of Justice and State Administration worked closely on this draft, and the core working group agreed on the first draft. The adoption of this new legislation will pave the way for a much-needed and long-overdue overall reform of business inspections, resulting in a decreased administrative burden and greater regulatory compliance by businesses. BEP and the Government of Serbia also made progress on program budget reform, successfully finishing the first two stages of the budgeting process reform and moving ahead with implementation. The introduction of program budgeting will lead to more efficient government spending as the GoS better controls line ministries' programs. BEP will continue to provide assistance in adoption of program budgeting by all budget users for the 2015 budget cycle. Additionally, the Law on Factoring was adopted in July, which is a major breakthrough in providing sources of finance for Serbian SMEs. Factoring makes it possible for businesses, particularly SMEs, to obtain working capital finance and protection from credit risk and to manage receivables and ensure they are collected. BEP and the Government of Serbia also developed the first draft of the Law on Planning and Construction, which will be released to the public for comment during the week of October 7. The Public-Private Partnership (PPP) Commission adopted the Value-for-Money Methodology (VfMM) developed by BEP, which allows the commission to analyze and approve PPP proposals from local and national governments. BEP also finished a series of roundtables on improving access to finance for SMEs, which aimed to raise awareness and promote the use of factoring and other financial instruments to support SME growth and development.