Serbia’s budget spending non-transparent, room for abuse, EWB reports
Budget spending in Serbia is a non-transparent process with plenty of room for abuse in suspending the market through public procurement and inter-governmental agreements, the European Western Balkans (EWB)website reported on Thursday.
Serbia’s budget spending non-transparent, room for abuse, EWB reports – Budget spending in Serbia is a non-transparent process with plenty of room for abuse in suspending the market through public procurement and inter-governmental agreements, the European Western Balkans (EWB)website reported on Thursday.
The importance of the issue can be seen in the latest available data, according to which public procurements participated in Serbia’s GDP with over eight percent, while the intergovernmental agreements for financing infrastructure projects exceeded the value of all public calls in the country last year.
Some of the most important segments in budget spending at all levels are deteriorating, which the civil society organisations have been warning about in vain.
The European Union, which values the fight against corruption in the accession process, is not sending enough signals that the situation in Serbia needs improvement, the EWB says.
Contracts on public procurement, goods and services for public administration, local self-governments or companies with majority public stakes make a large part of Serbia’s economy. EWB
According to the last Public Procurement Administration report for 2019, about 122,000 such contracts were signed in a year, with a total value exceeding 440.5 billion dinars (3.75 billion euros). That means that 8.14 percent of the then gross domestic product (GDP) went to public procurement.
The amount is higher if the intergovernmental agreements, loans sometimes involving a direct deal with the contractors concerning the essential infrastructure projects, are added.
It is estimated that the value of these agreements last year alone amounted to about four billion euros.
The inter-governmental deals most often avoid the Law on Public Procurement.
For example, the price of the Moravia Corridor, connecting the Belgrade- (southern city of) Nis motorway to the Milos Veliki freeway, has constantly been growing.
The estimated works cost has jumped from the original 500 million to 745 million euros, at least now.
Deadlines for completing the work have been changed several times, a common practice in the most significant state projects.
Other infrastructure projects like bridges, railways, gas pipelines are also being delayed, and prices increased.
Experts are increasingly warning about the potential problem of the so-called „corrosive capital,“ means of exploiting and further exacerbating weak governance in developing democracies.
The program coordinator in the Foundation for Responsible Society, Stefan Vladisavljev, said that contracting jobs had been entirely legal in Serbia since 2009. Still, the question is how legitimate it is.
China is increasingly becoming a creditor for infrastructure projects, which arouses scepticism within the European Union, the EWB reports.
„A comprehensive agreement on cooperation in infrastructure, ratified by Serbia’s Parliament, is treated as an international agreement, and thus, according to the Constitution, has greater force than any national law. The state can take loans and hire Chinese (construction) companies under the contract because it is treated as a bilateral agreement. That is not in contradiction with any law, but the problem is that Chinese partners are chosen for some projects without any tender procedure, consideration or competition.
According to him, Serbia’s political motivation is fast and easy economic development, which China can provide, unlike partners like the EU
whose assistance contains many conditions, primarily the procedures’ transparency.
„In 2019, the EU introduced a screening mechanism for foreign direct investments. That means a (special) regulatory body must review any agreement to be signed at the national level. We are not obliged to do that because we are still not a member state. However, the question is whether it will be part of a new cluster,“ in the accession negotiations with the EU, Vladisavljev said.
Even if Serbia forms such a body, it would be politically motivated and would potentially only approve such investments, like in Hungary, he adds.
„In Serbia, with a centralised decision-making system in which the government ‘lives or dies’ depending on how many new factories or kilometres of motorways it presents to voters, the cooperation between Beijing and Belgrade represents a happy and harmonious ‘marriage’,“ Vladisavljev added.
The latest EC report noted moderate progress in this field but added the recently adopted regulations on special procedures for infrastructure projects „are likely to seriously jeopardise the effective implementation of the Public Procurement Law because it allows exceptions for projects of particular importance to Serbia.“
It also said that the average number of bids per tender remained at 2.5, less than 2017. Civil society organisations warn that it represents a potentially significant source of corruption.
The Transparency Serbia (TS) program director, Nemanja Nenadic, said the progress reports had been warning for years about avoiding the Law on Public Procurement through intergovernmental agreements and special laws.
„It is stated as a recommendation, but no visible measures have been taken because Serbia has not only disobeyed those recommendations but is also intensifying those harmful actions,“ he said.
Nenadic added Serbia „doesn’t know what specifically the EU will do if this practice does not change. It is possible that we received part of the answer through the lack of opening new chapters or clusters, but that is not clearly said.“
„The EU can condition financial support for infrastructure projects by applying rules and good practices in the public procurement process, „he said, adding „that would be a concrete measure and a clear message from the EU.“
„For projects financed by the EU, public procurements are mandatory, but there is no sense in not applying the same practices for other loans or projects,“ Nenadic warned.
However, he remained pessimistic because „companies from the EU have also started to circumvent the law by direct agreements with the state.“