At the Palace of Serbia on January 20th, the President of the state, in accordance with the Constitution and with powers entrusted to him, presented the plan „Jump into the Future – Serbia Expo 2027“. By implementing this plan, Serbia will invest as much as 17.8 billion euros in the next three and a half to four years (?!). According to this plan, Serbia will make a „jump“ in six pillars (living standards, urban modernization, infrastructure, industrialization, Expo 2027, and integral development) and thus reach an average salary of 1,400 euros and a GDP of 92.7 billion euros by the end of 2027. This idea, which we will call the „plan“ for the purposes of this text, although we have never seen it, is yet another in a series of marketing tricks without adequate basis in law and reality. For precisely this reason, we will criticize it from an institutional perspective, as well as from the viewpoint of its economic expediency.
Why does this „plan“ have no legal basis? In addition to the already „worn-out“ insistence on the non-compliance with constitutional powers in a country where institutions are systematically being undermined, the question arises as to how this plan actually came about – based on which law, analysis, and whose priorities. In line with international practice, Serbia adopted the Law on the Planning System in 2018, which provides for the existence of a Development Plan, as the highest strategic and development document. This document should be prepared by the Republican Secretariat for Public Policy in cooperation with the Government, and the Government should adopt it and submit it to the National Assembly for approval.
The plan contains a vision and development priorities, taking into account international obligations, development potentials, trends, and available resources, and brings it all together into a coherent whole that (should) show what Serbia will be like when it is fulfilled. Since the fulfillment of any good plan requires long-term predictability and certainty, the plan (should) be adopted for a period of 10 years, and its implementation is achieved through an investment plan that is drawn up for a period of seven years.
It is clear that our „plan“, although inspired by the Plan in some elements, has omitted superfluous elements from the prescribed procedure. Criticizing the „plan“ from this aspect is extremely easy because it is completely unnecessary to say that nothing has been respected from a procedural standpoint. To begin with, instead of a joint effort by society and the institutions within its jurisdiction, the „plan“ was adopted in a non-transparent manner in the private kitchen of one person and, possibly, one party. Help is not needed for someone who knows everything, and citizens have said everything they needed to say – in the „never freer elections in modern history“ (add geographical term as desired).
Furthermore, the duration of the „plan“ (three and a half to four years) is coincidentally adjusted to the election cycle and Expo, not to some rule that other, more developed countries follow. Admittedly, one might say that this is actually a more „innovative“ way to present medium-term and budget financial plans. Although it would probably be closer to the factual situation, the timeframe for adoption does not fit here either. Also, the question could be raised as to why this „medium-term plan“ would be so focused on the past – it looks 14 years back, and only three and a half to four years forward. This is because the „hero of our story“ is actually a party pamphlet in free form, created by the monopolization of state resources and all levers of power. No more, no less than that.
As we announced, it was not difficult to expose the „plan“ from an institutional perspective. However, dealing with its economic substance is a more complex task. At the macro level, as we said, the plan promises an increase in GDP to 92.7 billion euros. With not-so-complicated mathematics, taking into account the projected inflation trend, we conclude that with the projected growth rate of four percent on average annually for the period from 2024 to 2027, the cumulative GDP increase would be 17 percent. This is not impossible, nor is it bad, but it is not good enough either, considering that we would have to grow almost twice as fast continuously to catch up with the EU in twenty years, and that the planned amount of public spending, i.e., investments, is 17.8 billion euros, which means that, as in the previous two years, together with other public investments, they will constitute five to seven percent of GDP.
What is not feasible, however, is the announced increase in wages from the current 836 to 1,400 euros. Considering that this is a nominal increase of 67 percent, with a projected 17 percent real economic growth and the assumption that the average inflation in that period will be 3.5 percent, and the exchange rate will be stable, it would mean that wages will actually increase by as much as 46 percent. The golden rule is that wages increase at the same rate as the value of what you produce, GDP, increases. When this is not the case, you become less competitive. Those who are cheaper and more efficient push you out of the game – foreign factories based on cheap labor move further away, and people are left without jobs (who said Geox!?). It doesn't sound nice, but that's how it is – there's no free lunch.
Such an increase in wages would be possible if we assumed that Expo would lead to foreign exchange inflows, which would then lead to a strong real appreciation, i.e., strengthening of the dinar. Without going into details, this scenario would have devastating consequences, similar to the ones above, and the NBS would rightly not allow it, even if such large foreign exchange inflows occurred. In other words, the „plan“ offers nothing special from a macro perspective. What is real – is not exciting. What is exciting – is not real.
Individual projects are much more interesting to consider. Navigating the jumble of individual projects, promises, and instruments that the „plan“ offers is aided by the newly launched Srbija2027 website. The website, frankly, was clearly made in a hurry, with inconsistent presentation and information levels – somewhere it states how much it will cost us and what is expected, while elsewhere we have to take their word for it. In some places, intentionally or not, it is shockingly cynical. For example, in the section on Citizens„ Living Standards, it states that “health has no price.„ Health has no price in a country that, in order to preserve economic activity and political peace, had one of the highest excess mortality rates in Europe during COVID, that treats with SMS messages, in which 15,000 people die annually from air pollution by PM particles (European Environment Agency), and which is opening new thermal power capacities (Kostolac B3), and which for some reason hides the health risks of the Jadar project, whether they are small or large.
Once again, there is no free lunch – health has a price! It does not mention the backbone of the economy – domestic small and medium-sized enterprises, which do need support to become economic tigers. More developed countries in the region are certainly doing that. But it does mention a viewpoint in the Ovčar-Kablar gorge, with a video clip featuring a testimonial from an „ordinary citizen“ about the importance of such investments. Of course, it doesn't matter that all mountaineering associations and people who actually visit the mountain pleaded not to build there. The national stadium is also there, of course, but enough has already been said about it – but that won't stop its construction.
There are other interesting things there. For example, in the section related to industrialization in agriculture, it is stated that from 2012 to 2024, the share of subsidies in the cost of production in dairy cattle farming and meat production increased from 64 to 74 percent. Knowing the state of these two sectors, three questions arise. First, how is it possible that these sectors are so inefficient that the state has to cover three-quarters of the cost of their production, and yet they barely survive? Second, who allowed this, and third, should Serbia, as a state, even produce milk/meat in current quantities. Well, these are the questions that the creators of the „plan“ should have considered, and, if they don't like the logical answer to these questions – to conclude how to reverse such a situation. Of course, that is missing.
It is relatively difficult to talk about the environment, given the conflicting views of the state. On the one hand, the Clean Serbia project can be characterized as a very positive step. It would indeed be nice if – when highways replace the Ibar highway – plastic bottles, bags, and stoves also disappear from the Ibar habitat. On the other hand, there is a cynical attitude towards the environment in the aspects we have already mentioned.
The „plan“ also includes unequivocally positive initiatives. These include, first and foremost, high and much-needed investments in scientific and research infrastructure through the construction of the multidisciplinary BIO4 campus. The campus is expected to bring together as many as seven faculties and nine scientific institutes from several „natural science“ fields and disciplines. Even if it doesn't become, as announced, the „bioeconomic center of Europe,“ the initiative itself shows that the state can sometimes recognize the importance of these areas for the modern era. The same can be said for the activities of the Office for Dual Education and the National Qualifications Framework, where 500 employers have registered to participate in the dual education program. The question arises as to why there are not more such thoughtful initiatives, while we continue to waste time on other stories?
As for the specialized Expo exhibition, to continue on a positive note, it can represent a good opportunity for the development of the domestic economy – but only if it is well utilized. It is necessary to give the domestic economy the opportunity to participate as much as possible, either as contractors or subcontractors, and to present to the world in an innovative way what it is capable of. From an infrastructural point of view, it is not bad that Belgrade is expanding „across the Danube,“ in order to relieve the already largely dysfunctional city center. In the end, it is not untrue that it is significant for a country like Serbia to be chosen to host the Expo. This exhibition can undoubtedly contribute to Serbia's recognition and reputation.
To conclude, Serbia is indeed facing economically challenging times, but also numerous opportunities. Of course, far more focus needs to be placed on domestic small and medium-sized enterprises – involve them in the Expo, introduce programs for digitalization and business improvement, reintroduce tax credits for investments… They are key to economic development, just as much as the development of science and the environment. Serbia has no time to waste on failures and empty talk. This requires trust and, of course, thoughtful and long-term planning, as is foreseen by law. And all of this cannot be done by one person, no matter how much they know.
The authors of the text are Pavle Medić and Lazar Ivanović, associates of the Center for Advanced Economic Studies The text was published on the website NIN-a
