While Serbia's economic system is being formally harmonized with European rules, almost half of the contracts concluded by the state are still implemented outside of regular public procurement procedures, warns the Fiscal Council
In recent years, Serbia has improved the normative framework public procurement. The public procurement portal has been digitized, the legal framework is largely harmonized with European rules, and transparency and competition have been formally established as the basic principles of spending public money.
However, the data show that the problem is not the laws, but their implementation.
"Serbia's specificity is reflected in the fact that the normative framework in this area is largely aligned with advanced European practices, while there are significant deviations and problems in implementation," announced the Fiscal Council in its Opinion on the Draft Fiscal Strategy for the period 2027-2029.
According to the rating Fiscal Council, during 2025, the public sector in Serbia concluded contracts worth around 15 billion euros, which represents almost 17 percent of the gross domestic product.
At the same time, contracts worth around seven billion euros were implemented with an exemption from the Law on Public Procurement. In other words, almost half of the public money intended for procurement was spent through procedures that were not subject to the rules of regular competition and transparency.
For economists, the issue of public procurement is not an administrative issue. The Fiscal Council reminds that the implementation of public procurement directly opens up the questions of the expediency of using taxpayers' money, the justification of the prices at which the state procures goods and services, as well as the way in which development priorities are determined.
This is precisely why the fact that the volume of contracts concluded outside the regular system is still extremely high is worrying.
"During 2025, public contracting authorities concluded contracts worth around seven billion euros (almost eight percent of GDP) with exemption from the application of the Law on Public Procurement. This represents only slightly less than half of the value of all contracts concluded by the public sector during the year, which is an extremely high share both in the domestic and international context," warns the Fiscal Council.
In particular, the Fiscal Council adds, it is important to emphasize that a significant part of these procurements refers to interstate agreements, which account for approximately a quarter of the value of contracts concluded outside the regular system and are not, as a rule, published.
According to the Council's assessment, bilateral interstate agreements account for approximately a quarter of the total value of contracts concluded outside the regular system of public procurement, and an additional problem is that such contracts are not, as a rule, published.
In recent years, interstate agreements have become one of the dominant models for the realization of large infrastructure projects in Serbia - from traffic infrastructure to energy and preparations for EXPO 2027.
This does not necessarily mean that such contracts are unfavorable. But it means that the public generally does not have the opportunity to assess whether they could have been more favorable.
Such data is not an exception related to one year. On the contrary, they confirm a trend that has been going on for years. A high share of non-standard procedures in Serbia is not new - the state has been systematically relying on procurements exempted from general regulations for years in key segments.
According to the data of the Pre-Contract coalition, in the period from 2020 to 2024, around 24 billion euros were spent through procurement exempted from the application of the Law on Public Procurement. In some years, the value of exempt procurements was even higher than the value of contracts concluded through regular procedures.
The law in Serbia foresees special regimes for certain jobs in the field of defense and security, certain legal services, contracts between related entities, land purchases or projects resulting from international agreements. Such exceptions also exist in other European countries.
The problem arises when exceptions are no longer exceptions.
In the Opinion on the Fiscal Strategy, the Fiscal Council welcomes the announcement that in the future the Ministry of Finance will publish a special report once a year on expenditures realized on the basis of special regulations, i.e. the lex specialis. Such expenditures for the year 2025 are estimated at around 480 million euros.
However, the Council warns at the same time that this is only a small part of the total investments realized according to non-standard procedures, the value of which is estimated at as much as 2,7 billion euros.
"What is very important in terms of content, and there is still no indication that it will be published, are the values and executions based on bilateral interstate agreements. Without this, progress in transparency will remain limited, and the possibility of essential control of the efficiency of public spending will still be insufficient. It is necessary to further clarify the scope of the data and the methodology of their presentation in the new report on exceptional procurement for 2025," announced the Fiscal Council.
In other words, citizens may get more information about how much money was spent, but not necessarily enough data to judge whether that money was spent effectively.
Although the Fiscal Strategy refers to a new report that will be published once a year on the website of the Ministry of Finance and that should provide additional insight into procurement under special procedures, the Fiscal Council sees the need for additional clarifications.
"The selected method of presentation is going in the right direction, but it also opened up certain technical issues that the Government should clarify in the revised version of the Strategy. In particular, in that report for the EXPO 2027 project, the realization of almost 15 billion dinars was shown, which is significantly lower than the amount recorded in the execution of the budget for this project. Since it is a complex program that includes a large number of related investments, it would be useful to explain in more detail the scope of the expenditures shown and the methodology of their grouping," he assessed. Advice.
The Fiscal Council pointed out another direction of potential improvement of the presentation of exempt procurements: it is necessary to show the expenditures in the table of the Ministry of Finance at the level of individual projects and their main components, because aggregated data without a more detailed structure have limited analytical value and do not allow a complete understanding of the structure and scope of these allocations.
The Fiscal Council does not question the need for the state to use exceptions to the Law on Public Procurement in certain cases. However, when jobs worth billions of euros are contracted through such procedures, the question is no longer whether there are exceptions, but how much of public spending takes place outside the system that should ensure competition, transparency and control of the spending of taxpayers' money.
Source: N1/Preugovor/Vreme
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