The fact that money loses value over time is a well-known phenomenon in economics. However, neither in theory nor in practice has it been recorded that one and a half billion euros becomes worthless and “budget-neutral” overnight.
Yet as talk of freezing European Union funds gains momentum, so Serbian officials in public downplay their value, obscuring the fact that the cause of the slowdown in payments is a lack of willingness by the authorities to implement reforms to which they themselves committed, writes Insajder.
When 51.6 million euros was paid into Serbia’s account in June last year as part of the Growth Plan for the Western Balkans, Finance Minister Siniša Mali did not hide his satisfaction.
“A portion of the advance payment amounting to 51.66 million euros has been disbursed to the Republic of Serbia, representing direct budgetary support. This confirms our commitment to continuing reforms and is another step towards aligning with EU standards, as well as further confirmation that we are on the European path,” Mali said in a statement from the Ministry of Finance.
In the statement, Mali thanked the European Union for its support and cooperation, saying that the Growth Plan brings the Western Balkans closer to the EU single market, which would contribute to “creating new jobs, lower prices, better quality, greater security and a wider choice of products and services, and overall, the improvement of economic activity”.
Eleven months later, Minister Mali changed his view of the funds allocated to Serbia under the Growth Plan, stating that those funds would have a “neutral effect” on Serbia’s budget.
“These are loans, while the rest are grants. I do not count on that in the budget – if it happens, it happens. However, it is all tied to reforms that Serbia is implementing on its path to the EU. I am more focused on achieving our goals, and let them deal with politics – if they want to release those funds, they will,” Mali said, noting that Serbia has so far drawn two tranches from the Growth Plan totalling 70 million euros.
Commenting on the finance minister’s later statement about the “budget neutrality” of funds from the Growth Plan, Dragana Đurica, Secretary General of the European Movement in Serbia, noted that this is, to put it mildly, an incorrect claim.
“We are not speaking here only about a single budget item and the nominal value of the money. What is at stake is the effect that money should have on Serbia’s development potential and the modernisation of the state. Part of those 1.5 billion euros is intended for investment in major development projects, such as infrastructure and energy, while the other part is intended for reform projects. This is not money falling from the sky that the state can dispose of as it wishes; it is tied to the country’s reform-driven modernisation and development projects. So it is dangerous to say that the money has no effect,” says Đurica.
How did the money from the Growth Plan dry up?
The answer to how money that “brings Serbia closer to the single market” became “budget-neutral” in less than a year could briefly be summed up as follows – because the money has dried up.
The European Commission established the Growth Plan for the Western Balkans in 2023 in response to criticism that the EU integration process is overly bureaucratised and that citizens of candidate countries do not see tangible benefits from reforms. Put simply, the Growth Plan envisages a kind of carrot in the form of money for concrete reforms. Which reforms, and in what sequence, will be implemented is defined in a document called the Reform Agenda, which the candidate countries themselves defined and the Commission approved. However, where there is a carrot, there is also a stick.
The agreement itself precisely defines which reforms must be implemented and the timetable for disbursing the funds. In Serbia’s case, the Growth Plan provides for a total of just over 1.5 billion euros in grants and favourable loans, provided that everything set out in the Reform Agenda is fulfilled. Serbia’s obligations under the Reform Agenda can be divided into four main areas and around one hundred specific measures. However, delays in meeting these obligations began as soon as the agenda was adopted.
Of the numerous obligations, the public discussion has focused most on adopting laws to implement ODIHR recommendations, defining a functional REM Council, and adopting a new Law on the Police that would depoliticise the police. Due to partial fulfilment of obligations, Serbia has so far received only half of one instalment, while all others remain pending.
However, failure to meet obligations under the Reform Agenda is only part of the problem. In recent days, there has been increasing discussion that the European Commission is considering “freezing” funds from the Growth Plan. The European Commission prefers to use the term “review of the fulfilment of conditions” for disbursement.
Meanwhile, in Serbia, there have been a series of moves that have drawn criticism from various European institutions – from the police entering the Rectorate and repression of demonstrators, to amendments to a set of judicial laws colloquially referred to as the Mrdić laws.
According to Bojana Selaković, coordinator of the National Convention on EU Accession, this development has led the European Commission to invoke a provision of the Growth Plan that does not concern the technical aspect of fulfilling obligations under the Reform Agenda.
“This instrument includes what are called general preconditions, meaning that the situation in various areas must be at a certain level for the disbursement of further tranches even to be considered. There has clearly been a deterioration in these general conditions, and the Mrdić laws were merely the final straw. Requests for further disbursement submitted by Serbia are now in procedure, and whether they will be released depends on the authorities’ next steps. Fulfilling the recommendations of the Venice Commission is certainly the first step, but based on everything known so far, it is questionable whether that will be sufficient, bearing in mind the deteriorating situation in the sphere of media freedoms,” says Selaković.
(021.rs, 05.05.2026)