State Department: Corruption, bureaucracy and inefficient judiciary problem for investors in Serbia

Serbia’s investment climate has modestly improved in recent years, but challenges remain, including bureaucracy, corruption, inefficient state-owned enterprises (SOEs), a large informal sector, and an inefficient judiciary, assesses the U.S. Department of State and adds that political influence is also a concern.

In the “2025 Serbia Investment Climate Statement,” financial stability, fiscal discipline, and reforms supported by the European Union (EU) are cited as advantages and it is added that attracting foreign investment continues to be a priority for Serbia.

It is added that IMF engagement coupled with reasonable fiscal policies contribute to a generally good macroeconomic environment.

It is reminded that the debt-to-GDP ratio is at relatively healthy ratio of below 50 percent and that, in October 2024, S&P gave Serbia its first-ever investment-grade rating, raising it to “BBB-” from “BB+” with a stable outlook.

The statement says that U.S. investors are generally positive about Serbia due to the location, well-educated labor force, competitive (but rising) labor costs, generous investment incentives, and free-trade arrangements with the EU and other markets.

U.S. investors generally enjoy a level playing field, it is added.

The State Department also says that political influence is also a concern and cites as an example the fact that in response to 2022 protests the government halted a proposed lithium project.

The statement says that “while mostly EU-supported reforms to improve privatization, procurement, labor law, permitting, and other areas continue, implementation is not always rapid or thorough.”

It is pointed out that, if the government delivers on EU accession related reforms, business opportunities should continue to grow.

It is also estimated that digitizing certain government functions (e.g., construction permitting and tax administration) has not yet dramatically improved processing times and lacks consistent implementation.

The government is making gradual progress in addressing inefficient state-owned enterprises (SOEs), the State Department assesses.

The government also plans to privatize 43 additional companies and is slowly downsizing Serbia’s bloated public-sector and SOE workforce.

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