Private Briefing February 2025
No. 143 | Year XII
Private Briefing continues its analysis of macroeconomic trends, shifting the focus from global to the local economic framework. In this issue, we examine key economic indicators, with particular emphasis on sustainable economic growth as a critical factor in planning and strategy. In addition to macroeconomic analysis, we cover the new credit program from the Development Fund for Youth and Startup Support, the IPARD III call under Measure 3, and present the subsidized loan model of the Development Fund of Vojvodina aimed at improving tourism capacities.
DFV: Subsidized Loans for Tourism Development
// Tourism is becoming one of the key drivers of economic growth and employment, and access to favourable financing is crucial for improving the tourism sector. The growing importance of rural and specialized tourism is particularly evident, responding to the increasing demand for authentic, sustainable, and environmentally friendly travel experiences. The development of additional tourism segments, such as gastronomic, cultural, and rural tourism, contributes to diversifying the offer and enhancing the sector’s resilience to seasonal fluctuations. With this in mind, the Development Fund of Vojvodina has announced a call for long-term loans aimed at investments in tourism and hospitality, with interest rate subsidies provided by the Provincial Secretariat for Economy. These loans are designed to enhance sector competitiveness, encourage investment in new and existing capacities, and strengthen rural and specialized tourism within the province. Eligible applicants include MSMEs, entrepreneurs, and registered agricultural holdings based in the province, with funding available for the construction, renovation, and equipping of tourism and hospitality facilities, sports and recreational infrastructure, as well as the procurement of tourism-related equipment and vehicles.
// This call is part of a broader strategy to support MSMEs and farmers through specialized financial instruments that address the specific needs of individual sectors, thus building a structured support system for sustainable development, competitiveness, and employment. The financial framework and loan terms are adapted to the needs of beneficiaries, with loan amounts of up to 20 million dinars for legal entities and 10 million for agricultural holdings. The repayment period is up to seven years, with a grace period of up to 24 months. The interest rate varies depending on the loan currency and the development status of the municipality in which the applicant operates, ranging from 1% to Belibor + 0,80%. The interest subsidy covers 100% of interest payments in the first year, significantly reducing the initial financing cost and facilitating investment implementation.
// This program enables entrepreneurs and farmers to invest in expanding and upgrading their capacities whether by constructing new facilities or improving existing ones. Financing can be used for the modernization of accommodation facilities, equipping restaurants and wineries, building wellness and spa centres and other specialized tourism amenities. In the long term, this type of support not only helps increase beneficiaries’ revenues but also allows them to position themselves on the market with a more attractive and competitive offering. The combination of a long repayment period, low financing costs, and a subsidized interest rate in the first year makes this call an excellent opportunity for those looking to expand or diversify their tourism capacities.
Macroeconomic Framework: Local Trends and Expectations
// The second Private Briefing of the calendar year traditionally provides an overview of the key economic trends from the previous year. Since last year, this analysis has been expanded into a trilogy, incorporating the local macroeconomic framework, recognizing its significance for the domestic economy and its divergence from global trends. In this edition, we transition from global developments to local indicators and trends. Globally, 2024 marked a shift in economic paradigms from “AI” – which Collins Dictionary recognized as the word of the year in 2023, to “Resilience”. While AI symbolized a technological approach to problem-solving, resilience reflects economies’ ability to adapt and thrive despite geopolitical tensions and economic turbulence. This shift indicates a broader perspective that integrates technological innovation with strategic development and sustainability. The global economy maintained stable growth at 3.2%, while inflation was brought under control, allowing central banks to gradually ease monetary policies. Serbia’s real GDP growth in 2024 reached 3.9%, an improvement over the previous year but still lagging behind the levels necessary for convergence with developed economies. The highest growth was recorded in construction (8.6%), manufacturing (4.4%), and retail trade (5.9%), while agriculture contracted by -8.8%, mainly due to adverse weather conditions. Compared to the Western Balkans region, which averaged 4.2% growth, and the EU, where growth stood at 3.6%, Serbia’s recovery is slightly slower. While some sectors have demonstrated solid performance, the structure of growth suggests that structural changes are necessary to achieve long-term development.
// Serbia’s macroeconomic framework shows signs of stabilization but lacks the acceleration needed for faster economic convergence. The key question remains how to create a more sustainable development model that does not rely solely on external factors but instead builds on internal capacities and resilience. To stimulate sustainable growth, it is essential to simplify regulatory processes that hinder the operations of small and medium-sized enterprises (SMEs), facilitate easier access to finance through incentive-based credit lines with extended repayment terms, direct infrastructure projects toward SME needs, particularly in green transition and digitalization, and invest in education and skill development necessary for the new era of resilient entrepreneurship.
The 2024 results confirm the need to reassess the current economic model. The main issue lies in excessive reliance on large investors and subsidized projects, while micro, small, and medium-sized enterprises (MSMEs) remain in the background. These businesses frequently struggle with limited access to finance, regulatory barriers, and infrastructure constraints. In this context, initiatives such as support for innovation-driven businesses and the implementation of new technologies like AI are crucial for strengthening Serbia’s economic competitiveness. However, technology alone is not enough. It is equally important to enhance economic resilience by diversifying funding sources, reducing dependency on foreign investments, and promoting domestic production.
// Regarding other indicators, inflation at the end of 2024 stood at 4.3%, a decline from 6.7% in 2023 but still above the 2022 average of 3.2%. The National Bank of Serbia’s key interest rate remained stable at 5.75% for most of the year, after gradually decreasing from 6.50%, which successfully stabilized inflation but did not eliminate it entirely. Unemployment fluctuated between 8.1% and 9.4%, while employment levels remained relatively stable, close to the three-year average. Employment growth in higher-complexity sectors is expected to continue, which could further contribute to wage growth. On the other hand, increases in the minimum wage continue to drive salary growth, while economic migration remains a challenge impacting the labor market. In December, the average net salary reached EUR 841, up from EUR 795 last year, aligning with the Western Balkans average of EUR 738, but still below the broader Balkan region’s average (EUR 870) and significantly below the EU average (EUR 2,100).
Throughout the year, the Serbian dinar remained stable against the euro, with an average exchange rate of 117.05 RSD/EUR, while fluctuating between 106 and 111 RSD/USD against the US dollar. This exchange rate stability contributed to predictability in business operations, while lower energy prices and increased manufacturing exports helped reduce the current account deficit from 2.6% of GDP to an estimated 1.9% of GDP. Total goods exports increased by 1.7%, while imports rose by 5.6%, indicating a recovery in domestic consumption but also a continued reliance
on imported energy and raw materials. The import-to-export coverage ratio remained stable at around 77%, while the foreign trade deficit stayed at approximately EUR 8 billion. Wage and employment growth in higher-complexity sectors (particularly IT, construction, and retail) have partially alleviated migration pressures, but the long-term solution lies in boosting domestic competitiveness through investment in education and technological advancement. Additionally, higher minimum wages may contribute to improving living standards and reducing income inequality.
// The macroeconomic framework of Serbia in 2024 shows signs of stabilization but not the level of growth acceleration required for economic convergence with developed economies. Structural challenges remain, particularly in the areas of low productivity, limited access to finance, and uncertainty regarding investment flows. Furthermore, data indicate that reliance on foreign direct investment (FDI) and subsidies is not a sustainable long-term development model. Conversely, growth in the SME sector, technological transformation, and integration into regional value chains remain key factors for competitiveness. However, businesses will need to take a proactive approach in leveraging available support programs. In this context, it is expected that economic policy will gradually shift towards prioritizing local actors, small businesses, innovation, and import substitution as key and sustainable elements of economic development. Accordingly, investments in education and infrastructure, combined with strengthening the capacities and competitiveness of local MSMEs through enhanced skills, resources, and improved access to financing, will be crucial for implementing a long-term development strategy based on a strong domestic economic ecosystem. This conclusion does not mark the end of the analysis but lays the foundation for further monitoring of economic dynamics. As government support programs, European integration efforts, and global economic trends continue to evolve, it will be critical for entrepreneurs and policymakers to stay informed, adapt to changes, and take advantage of available opportunities—which we will continue to analyze in our future editions.
IPARD III: Additional Support for Processing and Marketing of Agricultural Products
// Following previous IPARD cycles, it is time to analyse the new public call under the IPARD III program, specifically Measure 3 – Investments in Physical Assets for the Processing and Marketing of Agricultural and Fisheries Products. This call opens significant opportunities for the advancement of the food industry, focusing on modernizing capacities and increasing sector competitiveness.
In addition to the well-established measures from the IPARD II cycle, this new phase introduces additional opportunities for beneficiaries, including enhanced processing and marketing of products in the dairy, meat, egg, fish, fruit, vegetable, grape, grain, and industrial plant sectors. The current Measure 3 call enables co-financing for the construction and equipping of facilities, procurement of new equipment,
machinery, and software solutions, with a support intensity of up to 50% of eligible costs. An additional 10% is granted for investments in renewable energy sources, circular economy initiatives, and wastewater management. Eligible investment costs range from 20.000 to 1.300.000 EUR while total support per beneficiary under the IPARD III program can reach up to 2.500.000 EUR.
With clearly defined objectives, including modernization of the food industry and alignment with EU standards, IPARD III incentives allow for significant improvements in processing and marketing activities related to value-added agricultural products. By introducing new eligible sectors and incentives for sustainable technologies, the program remains open to a broad range of investments that can contribute to the sector’s long-term sustainability. However, this call maintains strict application requirements, necessitating a detailed business plan and complete project documentation at the time of application. In addition to the standard IPARD procedures, investors must carefully plan their investments, select eligible costs, and gather the necessary documentation to increase their chances of approval.
// This call enables agricultural holdings, cooperatives, agribusinesses, and food processors to invest in modern equipment and technologies that enhance production capacity and product quality. In practice, this means that projects such as automating production lines, acquiring energy-efficient machinery, constructing cold storage facilities, modernizing meat and dairy processing plants, and digitalizing food industry processes can be financed under this call. Such investments in modern fixed assets directly reduce operating costs by improving efficiency and productivity, while also minimizing revenue losses caused by maintenance and repairs associated with outdated equipment. Additionally, product uniformity, quality control, and meeting delivery deadlines can be crucial for maintaining or expanding competitiveness in international markets.
// Given the trends shaping the industry in recent years – which are expected to continue – beneficiaries planning investments in renewable energy or waste management can receive additional incentives, significantly lowering initial investment costs and accelerating returns on investment. Furthermore, circular economy initiatives can open new market opportunities and increase product competitiveness in both domestic and international markets. Experiences from previous calls indicate that one of the key factors in increasing the likelihood of successful applications is expert support in preparing applications, analysing investment plans, and guiding applicants through the submission process. Our team of experts is available to provide assistance at every stage—from preparing project documentation to investment implementation—ensuring that beneficiaries can fully utilize the support offered by IPARD. Additionally, we offer initial needs assessments and assistance in securing necessary pre-financing, helping applicants maximize the potential benefits of this program.
DF: Support for Young Entrepreneurs and a Foundation for Startup Development
// Starting a business is one of the greatest challenges for young entrepreneurs, with access to financing often being the key factor determining success in the early years. The Development Fund of the Republic of Serbia has announced a new Public Call for Financial Support aimed at young business starters, offering them the opportunity for long-term financing under favourable conditions. The program targets entrepreneurs, micro, and small enterprises established no earlier than January 1, 2019, whose founders and legal representatives are individuals aged 20 to 35. Its primary goal is to facilitate business launch and stabilization by providing funding for essential investments.
The financial framework and loan conditions are tailored to the expected needs of young entrepreneurs, with a maximum loan amount of RSD 5 million and a repayment period of up to 78 months, including a grace period of up to 18 months. The interest rate is 1.5% annually for standard collateral instruments, while borrowers providing a bank guarantee can access an even lower rate of 1% annually. Additionally, no
application processing fee is required, further reducing financing costs. This call allows financing for key investments necessary for a stable business launch, including the procurement of machinery, tools, and equipment, the purchase or adaptation of business and production premises, the acquisition of vehicles intended for business operations, as well as working capital financing up to 30% of the loan amount.
//Young entrepreneurs face numerous challenges, including a lack of startup capital, limited access to clients and suppliers, and insufficient financial reserves for stable growth. Additionally, many startups lack the time and resources to delay monetization while building brand recognition and stable sales. This program ensures that key investments in the early business phase do not have to be financed solely from personal funds, but rather through affordable loans with extended repayment terms, reducing pressure on initial monthly expenses. Furthermore, favorable interest rates and a longer grace period allow new businesses to establish a foundation for sustainable growth before repayment begins. This is particularly crucial in sectors where initial revenues take longer to materialize, but investment needs are high (e.g., manufacturing, IT, high-value-added services, and artisan trades). This program is part of a broader initiative to support entrepreneurship and the MSME sector, through which the government provides better access to financing for young entrepreneurs via various mechanisms. It complements other incentives, such as tax relief for newly established businesses and special support programs for export-oriented companies. Although this program does not include grants or mentoring, its value lies in the availability of affordable financing, a crucial element for stabilizing businesses in their early years. Through this call, young entrepreneurs gain an opportunity to invest in business growth and development under conditions that ensure long-term sustainability.
| KEY ECONOMIC INDICATORS | Feb - 25 | |
|---|---|---|
| 1 | Annual inflation | 4,60% |
| 2 | Reference interest rate | 5,75% |
| 3 | Unemployment rate | 8,10% |
| 4 | Average net salary - RSD | 100.738 |
| 5 | Average pension - RSD | 50.687 |
| 6 | Exchange rate RSD/EUR | |
| On the last day of the month | 117,1203 | |
| Average exchange rate for the month | 117,1174 | |
| 7 | Exchange rate RSD/USD | |
| On the last day of the month | 112,3859 | |
| Average exchange rate for the month | 111,5616 | |
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