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USAID Business Enabling Project. USAID-SEIO Consultative Monitoring under USAID Assistance Agreement: 169-AA-10-EG/001 Susan Kutor, USAID/Serbia Economic Growth Office Director February 28, 2012.

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Usaid business enabling project

USAID Business Enabling Project

USAID-SEIO Consultative Monitoring under

USAID Assistance Agreement: 169-AA-10-EG/001

Susan Kutor, USAID/Serbia Economic Growth Office Director

February 28, 2012

USAID Business Enabling ProjectSEIO Aid coordination sector: Private Sector Development; Public Administration

Consulative process to date

  • Spring 2011 - Consultations with GoS counterparts helped to develop and reach agreement on Year One work plan priorities

  • February 2012 –BEP held two-day retreat with GoS counterparts to discuss Year Two work plan in depth

  • Date of USAID-GoS work plan reviews:

    Last review: May 2011

    Next review: February 2012

State of implementation

  • Inspections Reform – A series of roundtables and outreach led to the establishment of a GoS inter-ministerial Inspections Reform Coordination Body, and development of an inspections reform strategy is underway.

  • Access to Finance – A series of roundtables and outreach has been completed; compilation into detailed issues paper and recommendations for reforms to be completed in Spring 2012

  • Quasi-fiscal Charges – USAID is conducting a study of quasi-fiscal charges that will quantify the quasi fiscal charges imposed on business, and will provide recommendations and guidelines for reform.

State of implementation continued

  • Construction Permits – A study and stakeholders dialogue on the main constraints is ongoing, with the study to be completed in March 2012. This study will provide guidelines and an action plan for reform.

  • Enforcement of Judgments – Out of 19 bylaws need to implement new law, 4 were developed and adopted; 7 were developed and are ready to be adopted; 8 need to be developed.

  • Data Gathering: A representative Business Survey of 1000 Serbian-owned businesses identified issues, established baseline and dialogue.

  • A Standard Cost Model quantified the cost of inefficient administrative procedures, helping to establish reform priorities

Key contributions from gos partners for year one

  • The GoS Coordination Body for Inspections Reform was formed.

  • 11 Bylaws for the new Law on Enforcement were developed; 4 adopted.

  • A GoS Decree on conversion of usage rights to ownership rights was enacted, positively affecting the construction business.

  • All of the bylaws for the Capital Markets Law were adopted.

  • The Fiscal Council was established and operating in accordance with the law; has informed budget decisions.

Indicators business enabling environment improved

  • Decrease in the “Burden of Government Regulations” – World Economic Forum - May

    • Number of Commerce Laws and Regulations Simplified and Implemented in Accordance with International Standards -

      - 24 bylaws/amendments adopted in Year One

    • Decrease in costs for businesses to comply with the regulatory framework – baseline established through Standard Cost Model

Indicators macroeconomic environment improved

  • Increase in Foreign Direct Investment

    • Improvements in the Open Budget Index (“OBI”) Score as reported by the International Budget Partnership – Every 3 years - 2013

    • Improved score in WEF GCI Financial Market Development indicator – September

    • Improved Government Budget Balance as percentage of GDP – April

    • Increased credit to private sector as a percentage of GDP – end of project

Obstacles and proposed solutions

  • Issue 1:The Ministry of Justice is insufficiently focused on proper implementation of the Law on Enforcement of Judgments. Bylaws and system still not in place.

  • Risk: The Ministry is not ready for implementation of the law by May 2012, particularly fielding and supervising the new Professional Enforcement Officers, and the law is not successfully implemented.

  • Solution: Ministry of Justice needs to appoints a project leader with the authority and time to manage implementation. USAID will transition work on enforcement of judgments to the upcoming GIZ project.

Obstacles and proposed solutions1

  • Issue 2: USAID has not been able to provide critical assistance in performance-based budgeting as envisioned due to lack of receptivity on the part of the Budget Department of the Ministry of Finance.

  • Risk: The lack of performance-based budgeting perpetuates the current practice of basing the budget on short-term considerations and political expediencies.

  • Solution: The GoS provides direction to the Budget Department of the Ministry of Finance to implement performance-based budgeting.