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South East Europe
Serbia |
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Local Government
Serbia has 190 municipalities (opcinas). A new Law on Local Public Finance has been enacted in 2006. Its impact cannot be evaluated now as it came into effect in the 2007 budgets. However, it promises to make substantial progress in the equity, transparency and stability of the fiscal decentralization system. The reforms enacted in the 2006 Law have been necessitated by the introduction of VAT and the consequent abolition of Sales Tax whose sharing with local government constituted a major component of local budgets. The new Law provides alternative revenue sources, but opportunity has been taken to introduce a more equitable horizontal distribution of revenues and greater stability.
There has been no substantial change in local government responsibilities since 2004. Municipalities retain charge of a wide range of communal and utility services, although this continues to be qualified by parliamentary failure to enact a Law establishing municipal rights to ownership of property. Social sector responsibility remains confined to pre-schools and maintenance of primary and secondary school buildings. Local budget expenditure has increased slightly as a percentage of public expenditure (from 13.81% in 2003 to 13.92 % in 2006) but declined, again marginally, as a percentage of GDP (from 6.53% in 2003 to 6.21% in 2006).
Shares of Sales Tax have been replaced by shares of Wage Tax fixed permanently at 40% and again distributed by origin. A new Block Grant has been introduced comprising a general subsidy distributed 65% by population and 19.3% by area, and the balance by other factors related to education, together with an equalization transfer described below.
Under the previous system dominated by origin based sales tax sharing, the four largest cities have received 57% of local government revenue to serve 30.7% of the population. The 2006 legislation should lead to a phased reduction of this imbalance. Sales tax sharing has been partially replaced by a block grant distributed according to objective need factors. The grant also includes a horizontal equalization element which brings shared tax revenues up to 90% of the national average, while reducing the grants of those municipalities whose tax shares per capita exceed the national average by more than 50% (by 50% of that excess).
The 2006 Law substantially increases the discretion of local government while limiting that of the Government. In particular local governments gain the right to determine rates of property tax and to collect it. They are also awarded the right to borrow money for investment within a debt service ratio of 15% of annual revenue. The Ministry of Finance retains a veto on new debt but only if exercised within 15 days. The Law also reduces dependence on annual state budget legislation. It fixes the wage tax share at 40% and indexes the block grant at 1.7% of GDP.
Official homepage
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1 Government background |
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The Kingdom of Serbs, Croats, and Slovenes The Kingdom of Serbs, Croats, and Slovenes was formed in 1918; its name was changed to Yugoslavia in 1929. In 1941 the territory was occupied by Nazi Germany and in 1945 the group headed by Josip Bros Tito took full control of Yugoslavia upon German expulsion. Although Communist, Tito's new government and its successors managed to steer their own path between the Warsaw Pact nations and the West for the next four and a half decades. In the early 1990s, post-Tito Yugoslavia began to unravel along ethnic lines: Slovenia, Croatia, Macedonia, and Bosnia and Herzegovina were recognized as independent states in 1992. The remaining republics of Serbia and Montenegro declared a new \"Federal Republic of Yugoslavia\" (FRY) in April 1992 and, under President Slobodan Milosevic, Serbia led various military intervention efforts to unite ethnic Serbs in neighboring republics into a \"Greater Serbia\". These actions led to Yugoslavia being ousted from the UN in 1992, but Serbia continued its campaign until signing the Dayton Peace Accords in 1995. In 1998-99, massive expulsions by FRY forces and Serb paramilitaries of ethnic Albanians living in Kosovo provoked an international response, including the NATO bombing of Belgrade and the stationing of a NATO-led force (KFOR), in Kosovo.
Federal elections in the fall of 2000 brought about the ouster of Milosevic and installed Vojislav Kostunica as president. The arrest of Milosevic in 2001 allowed for his subsequent transfer to the International Criminal Tribunal for the Former Yugoslavia in The Hague. In 2001, the country was once more accepted into the UN under the name of the Federal Republic of Yugoslavia. Kosovo has been governed by the UN Interim Administration Mission in Kosovo (UNMIK) since June 1999, pending a determination by the international community of its future status. In 2002, the Serbian and Montenegrin components of Yugoslavia began negotiations to forge a looser relationship. In February 2003, the Constitutional Charter was ratified by the Republic of Serbia, Republic of Montenegro, and the Yugoslav Parliament. The Constitutional Charter changed the name of the country from Federal Republic of Yugoslavia to \"Serbia and Montenegro\". Under the new Constitutional Charter, most federal functions and authorities devolved to the republic level. The office of President of the Federal Republic of Yugoslavia, held by Vojislav Kostunica, ceased to exist once Svetozar Marovic was elected President of Serbia and Montenegro in March of 2003.
The Republic of Montenegro, however, held a referendum of independence from Serbia on May 21, 2006, with 55.5% voting in favor of separate state. The Montenegrin Parliament made a formal Declaration of Independence on June 3, 2006. The Serbian government recognized Montenegro on June 15. The protocol on establishing diplomatic relations between Serbia and Montenegro was signed on June 22. In October 2006, the Serbian parliament unanimously approved - and a referendum confirmed - a new constitution for the country.
Government type: Republic
Capital: Belgrade
Independence: 5 June 2006 (from Serbia and Montenegro)
National Day: 15 February
Constitution: adopted 8 November 2006; effective 10 November 2006
Executive branch:
Chief of state: President Boris TADIC (since 11 July 2004); Kosovo - President Fatmir SEJDIU (since 10 February 2006)
Head of government: Prime Minister Vojislav KOSTUNICA (since 3 March 2004); Kosovo - Prime Minister Agim CEKU (since 10 March 2006)
Cabinet: Federal Ministries act as cabinet; Kosovo - ministry heads act as cabinet; some ministry functions are controlled by the UNMIK
elections: president elected by direct vote for a five-year term (eligible for a second term); election last held 27 June 2004 (next to be held in 2007 due to constitutional changes); prime minister elected by the Assembly; Kosovo - president is elected by the Assembly for a three-year term; prime minister and proposed cabinet are elected by the Assembly
Election results: Boris TADIC elected president in the second round of voting; Boris TADIC received 53% of the vote.
Legislative branch:
Unicameral National Assembly (250 seats; deputies elected by direct vote to serve four-year terms); Kosovo - unicameral Assembly (120 seats; 100 deputies elected by direct vote and 20 deputies from minority community members; to serve three-year terms)
Elections: last held on 21 January 2007 (next to be held in 2011); Kosovo - last held on 23 October 2004 (next to be held in 2007)
Election results: Serbia National Assembly: percent of vote by party - NA; seats by party - SRS 81, DSS 64, DSS-NS 47, G17 Plus 19, SPS 16, LDP Coalition 15, SVM 3, KZS 2, URS 1, KAPD 1, RP 1; Kosovo Assembly: percent of vote by party - NA; seats by party - LDK 46, PDK 30, AAK 9, SLKM 8, Ora 7, Bosniak Vakat coalition 4, KDTP 3, other 13 |
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2 Area |
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total: 88,361 sq km
land: 88,361 sq km
water: 0 sq km |
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3 Geography |
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Serbia is situated in Southeastern Europe, bordering the Adriatic Sea, between Albania and Bosnia and Herzegovina; to the north, rich fertile plains; to the east, limestone ranges and basins; to the southeast, ancient mountains and hills. The country borders upon Albania (115 km), Bosnia and Herzegovina (302 km), Bulgaria (318 km), Croatia (241 km), Hungary (151 km), Macedonia (221 km), Montenegro 203 km, Romania (476 km).
The natural resources in Serbia are oil, gas, coal, iron ore, copper, lead, zinc, antimony, chromite, nickel, gold, silver, magnesium, pyrite, limestone, marble, salt, arable land. |
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4 People |
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Population: 10,150,265 (July 2007 est.) Nationality: noun: Serb(s); adjective: Serbian.
Ethnic composition of Serbia is: Serb 82.9%, Hungarian 3.9%, Romany (Gypsy) 1.4%, Yugoslavs 1.1%, Bosniaks 1.8%, Montenegrin 0.9%, other 8% (2002 census)
The religions practiced in Serbia are Orthodox (85%), Serbian Orthodox 85%, Catholic 5.5%, Protestant 1.1%, Muslim 3.2%, unspecified 2.6%, other, unknown, or atheist 2.6% (2002 census)
Languages: Serbian 88.3% (official), Hungarian 3.8%, Bosniak 1.8%, Romany (Gypsy) 1.1%, other 4.1%, unknown 0.9% (2002 census); note: Romanian, Hungarian, Slovak, Ukrainian, and Croatian all official in Vojvodina; Albanian official in Kosovo. |
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5 Economy |
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GDP Annual Growth: 5.9 % (for Serbia alone, excluding Kosovo) (2006 est.)
Unemployment rate: 31.6%; note - unemployment is approximately 50% in Kosovo (2005 est.)
Inflation rate (consumer prices):15.5% (2005 est.)
Public debt: 53.1% of GDP (2005 est.)
Currency: Serbian Dinar (RSD).
Economic aid - recipient:
Prior to 1999, Belgrade received no foreign aid from the United States or western European countries. Since the fall of Milosevic in October 2000, however, European Union aid has steadily increased, and the U.S. also gives aid to Serbia, though there are congressional restrictions based on Serbia\'s need to meet its international obligations to the International Criminal Tribunal for the former Yugoslavia (ICTY). $2 billion pledged in 2001 to Serbia and Montenegro (disbursements to follow over several years; aid pledged by EU and US has been placed on hold because of lack of cooperation by Serbia in handing over General Ratko MLADIC to the criminal court in The Hague). In May 2006, Secretary Rice did not certify that Serbia was cooperating with the ICTY, suspending approximately $7 million of aid for fiscal year 2006.
MILOSEVIC-era mismanagement of the economy, an extended period of economic sanctions, and the damage to Yugoslavia\'s infrastructure and industry during the NATO air strikes in 1999 left the economy only half the size it was in 1990. After the ousting of former Federal Yugoslav President MILOSEVIC in October 2000, the Democratic Opposition of Serbia (DOS) coalition government implemented stabilization measures and embarked on a market reform program. After renewing its membership in the IMF in December 2000, a down-sized Yugoslavia continued to reintegrate into the international community by rejoining the World Bank (IBRD) and the European Bank for Reconstruction and Development (EBRD). A World Bank-European Commission sponsored Donors\' Conference held in June 2001 raised $1.3 billion for economic restructuring. In November 2001, the Paris Club agreed to reschedule the country\'s $4.5 billion public debt and wrote off 66% of the debt. In July 2004, the London Club of private creditors forgave $1.7 billion of debt just over half the total owed. Belgrade has made only minimal progress in restructuring and privatizing its holdings in major sectors of the economy, including energy and telecommunications. It has made halting progress towards EU membership and is currently pursuing a Stabilization and Association Agreement with Brussels. Serbia is also pursuing membership in the World Trade Organization. Unemployment remains an ongoing political and economic problem. The Republic of Montenegro severed its economy from Serbia during the MILOSEVIC era; therefore, the formal separation of Serbia and Montenegro in June 2006 had little real impact on either economy. Kosovo\'s economy continues to transition to a market-based system and is largely dependent on the international community and the diaspora for financial and technical assistance. The euro and the Serbian dinar are both accepted currencies in Kosovo. While maintaining ultimate oversight, UNMIK continues to work with the EU and Kosovo\'s local provisional government to accelerate economic growth, lower unemployment, and attract foreign investment to help Kosovo integrate into regional economic structures. The complexity of Serbia and Kosovo\'s political and legal relationships has created uncertainty over property rights and hindered the privatization of state-owned assets in Kosovo. Most of Kosovo\'s population lives in rural towns outside of the largest city, Pristina. Inefficient, near-subsistence farming is common.
Note: economic data for Serbia currently reflects information for the former Serbia and Montenegro, unless otherwise noted; data for Serbia alone will be added when available. |
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6 Sources |
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CIA Fact Book
The US Department of State
Freedom House Country Report 2005: Serbia
Official website of the Serbian government
The Parliament of Republic of Serbia
The Law on Local Self-government
Fact Sheets on Fiscal Decentralisation
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