Serbia has a transitional economy mostly dominated by market forces, but the state sector remains large and many institutional reforms are needed. The economy relies on manufacturing and exports, driven largely by foreign investment. MILOSEVIC-era mismanagement of the economy, an extended period of international economic sanctions, and the damage to Yugoslavia’s infrastructure and industry during the NATO airstrikes in 1999 left the economy only half the size it was in 1990. After the ousting of former Federal Yugoslav President MILOSEVIC in September 2000, the Democratic Opposition of Serbia (DOS) coalition government implemented stabilization measures and embarked on a market reform program. Belgrade has made progress in trade liberalization and enterprise restructuring and privatization, including telecommunications and small- and medium-size firms. It has made some progress towards EU membership, signing a Stabilization and Association Agreement with Brussels in May 2008, and with full implementation of the Interim Trade Agreement with the EU in February 2010, but a decision on candidate status has been postponed to 2012. Serbia is also pursuing membership in the World Trade Organization. Structural economic reforms needed to ensure the country’s long-term viability have largely stalled since the onset of the global financial crisis. Serbia, however, is slowly recovering from the crisis. Economic growth in 2011 was 2.9%, following a modest 1.7% increase in 2010 and a 3.1% contraction in 2009. High unemployment and stagnant household incomes are ongoing political and economic problems. Serbia signed a new $1.5 billion Stand By Arrangement with the IMF in September 2011 that expires in March 2013. IMF conditions on Serbia constrain the use of stimulus efforts to revive the economy, while Serbia’s concerns about inflation and exchange rate stability preclude the use of expansionary monetary policy. Serbia adopted a new long-term economic growth plan in 2010 that calls for a quadrupling of exports over ten years and heavy investments in basic infrastructure. Serbia is still a transitional economy with unfinished privatization and incomplete structural reforms. Major challenges ahead include: high government expenditures for salaries, pensions and unemployment; a growing need for new government borrowing; rising public and private foreign debt; and stagnant levels of foreign direct investment. Privatization revenues have fallen precipitously in recent years, while a high percentage of economic activity remains in the hands of the state. Other serious challenges include an inefficient judicial system, high levels of corruption, and an aging population. Factors favorable to Serbia’s economic growth include a strategic location, a relatively inexpensive and skilled labor force, and a generous package of incentives for foreign investments.

One of the biggest problems facing health care reformers in Serbia in 2003 was a deficit of reliable data needed to build a baseline of information and enable evidence-based policy making and monitoring within the health sector. Policy-makers realized that if they wanted to develop policies to enhance the performance of their systems, they needed reliable information on the quality of financial resources used for health, their sources and the way they were used. Since National health accounts (NHA) could produce evidence to help policy makers and health managers to understand their health systems and improve their performance, the Serbian Government decided to implement NHA in 2004.

The implementation of NHA in Serbia has resulted in increased transparency of financial flows in the health sector. It was the first time ever that private sector of health care providers had been observed along with the public sector. Before the NHA, data on financial flows within the private sector was provided by Republican Statistical Office; however this data was inadequate and insufficient any assessment of health services provided and their expenditures. Policy makers were impressed with the financial picture NHA could provide and, wanting more transparency and reliability for private as well as public health sector financial data, introduced a new “Fiscal Bill Policy”. The Fiscal Bill Policy represents the major policy impact of NHA, requiring all private and public health providers to provide patients with fiscal invoices. The Bill will provide a foundation for more transparency in the activities of private providers and will aid the public health sector in reducing shady economies. Health policy makers now have a clearer picture of overall financial flows within the health sector that will enable future planning and distribution of funds more reliably.