Serbia is preparing new rules for the assessment and management of public capital projects as government investment remains elevated ahead of EXPO 2027 and the authorities seek tighter control over project preparation, financing and implementation.
- New framework would cover a broad range of investments
- €20 million threshold linked to IMF investment reforms
- Capital Projects Commission to oversee republican investments
- Project readiness and lifecycle costs brought into focus
- Public-investment reform tied to EU funding
- Sovereign financing costs increase importance of project selection
- Investment spending remains high through 2028
The Ministry of Finance held consultations on the draft decree from 10 to 17 August 2026. As of 20 August, the 2023 Capital Projects Decree remained in force, with the replacement framework still awaiting formal adoption. The proposed system would introduce more extensive feasibility assessments, cost-benefit analysis, central registration and monitoring of projects throughout their investment cycles. It would also expand the role of the Ministry of Finance in determining which projects are sufficiently prepared to proceed.
The reform comes as Serbia maintains a general-government deficit ceiling of 3% of GDP in 2026 and 2027, while public investment remains at historically high levels. The European Commission estimates government gross fixed capital formation at 6.7% of GDP in 2026, following 7.1% in 2025, before declining to 6.4% in 2027 and 6.1% in 2028. The investment cycle encompasses motorway and railway construction, energy facilities, urban infrastructure and projects connected with EXPO 2027.
New framework would cover a broad range of investments
The draft defines capital projects to include construction and major maintenance of buildings and public infrastructure, project-planning services, land acquisition, machinery, equipment and other non-financial assets intended for public purposes. Its scope would extend beyond projects financed directly through the state budget. Investments backed by government borrowing, sovereign guarantees, subsidies, donations, transfers, EU funds, international financial institutions and foreign governments would also fall within the framework.
Security-sector projects are explicitly excluded. The wider scope reflects the variety of financing mechanisms used for Serbia’s capital programme, including budget resources, bilateral lending, international financial institutions, government guarantees and market borrowing. Such arrangements can generate fiscal obligations through guarantees, delayed payments, cost overruns, liabilities of state-owned enterprises and future maintenance requirements.
Under the proposed classification system, projects would be divided into republican, provincial and local categories based on estimated costs, principal beneficiaries and financing sources. A republican capital project would generally require estimated expenditure of at least €20 million, with the Republic of Serbia as its principal beneficiary. Projects financed wholly or partly through public funds, EU resources, international assistance, guarantees or subsidies could qualify under the republican category.
The threshold for provincial and local projects would be €2 million. Provincial projects would primarily benefit the autonomous province, while local projects would mainly serve municipalities or cities. Projects that do not meet the prescribed classification criteria would not qualify as capital projects under the decree.
€20 million threshold linked to IMF investment reforms
The €20 million threshold also corresponds to the level being addressed in Serbia’s work with the International Monetary Fund on public-investment management.
The IMF has been working with Belgrade on stricter appraisal procedures for major projects above that amount, including standardised cost-benefit analysis, disclosure of underlying cost assumptions and stronger monitoring of construction delays and cost overruns. The Fund has also called for the investment-management framework to progressively include large projects implemented through special arrangements and government-to-government agreements, rather than leaving economically significant investments outside standard appraisal procedures.
A central element of the Serbian draft is the creation of a centralised capital-project database under the Ministry of Finance. The database would contain project documentation throughout the investment cycle and support appraisal, selection, prioritisation, implementation monitoring and evaluation after completion. Serbia introduced its Public Investment Management Information System, or PIMIS, at the republican level in 2024. Authorities have indicated plans to extend its use to provincial and local governments. Integration with the broader budget system is intended to create a unified project pipeline covering preparation, approval and implementation stages.
Capital Projects Commission to oversee republican investments
The draft would also formalise a Capital Projects Commission responsible for assessing, selecting and prioritising republican projects, monitoring implementation and managing the wider capital-project process. The commission would be chaired by the Serbian prime minister. The ministers responsible for finance, construction and European integration would serve as deputy chairs. Separate commissions would operate at provincial and local levels. The proposed framework would strengthen project preparation requirements. Where planning and construction legislation already requires a preliminary justification study and a full justification study, those documents would form part of the capital-project assessment.
For republican projects not subject to those requirements under construction legislation, sponsors would instead be required to prepare preliminary and full feasibility studies. A cost-benefit analysis would accompany the relevant feasibility documentation for republican projects undergoing assessment. The finance minister would determine the methodology, content and submission requirements. The draft also divides the project cycle into preparation and implementation. Preparation would cover the initial investment idea, project analysis, preparation, readiness assessment and final selection. Implementation would include project execution, revisions to implementation plans, project rationalisation, completion and evaluation of the results achieved.
Project readiness and lifecycle costs brought into focus
The proposed sequence places greater emphasis on project readiness before implementation. Engineering documentation, land acquisition, utility relocation, permits and cost assumptions can affect construction schedules and final project costs. The IMF has also encouraged Serbia to incorporate maintenance and operating costs more systematically into medium-term budget planning.
The proposed framework would therefore cover the investment cycle beyond the construction phase, including the assessment of completed projects and their results.
The draft provides for fines of between RSD 50,000 and RSD 150,000 for responsible officials who breach the decree. Projects initiated under the 2023 framework but not yet completed would continue their project cycles under the new rules. Following adoption and publication in the Official Gazette, the new decree is expected to enter into force on the eighth day after publication, replacing the 2023 regulation.
Public-investment reform tied to EU funding
Public-investment management is also included among the reforms in Serbia’s Reform Agenda under the EU Growth Plan for the Western Balkans. Approximately €13.59 million in EU financial support is linked to individual milestones covering improvements to the public-investment framework. These include a policy paper and time-bound action plan, followed by further strengthening of the legal framework.
The European Commission identified public-investment management as a continuing challenge in its 2026 Economic Reform Programme assessment. It noted that the government retained substantial discretion to designate projects as being of particular importance, potentially placing them outside standard planning and oversight arrangements. The Commission called for stronger long-term planning, regular monitoring and a unified and transparent public-investment system.
Sovereign financing costs increase importance of project selection
The investment-management reform comes alongside a changing sovereign-financing environment. Serbia entered 2026 with an S&P rating of BBB- with a stable outlook, its first investment-grade rating. Fitch maintained BB+ with a positive outlook in July, while Moody’s rates Serbia Ba2 with a stable outlook after removing its previous positive outlook in February amid higher political and geopolitical risks. Serbia raised approximately €3 billion equivalent through a three-tranche international bond transaction in April 2026.
The issuance comprised a €1 billion five-year eurobond carrying a 4.25% coupon, a €900 million 12-year green bond with a 4.875% coupon, and a $1.25 billion 10-year dollar bond. The dollar obligations were hedged into euros at an effective euro coupon of approximately 4.66%. Investor demand was strong, while the financing costs were above the exceptionally low sovereign borrowing costs available before the global interest-rate cycle changed.
The IMF expects Serbian economic growth of around 2.8% in 2026, followed by acceleration to approximately 4% in 2027, with EXPO-related activity contributing to the expansion. The European Commission’s ERP projections put gross government debt at approximately 44.5% of GDP in 2026, 44.3% in 2027 and 44.1% in 2028.
Investment spending remains high through 2028
The scale of the public-investment programme means that the new rules will apply during a period of particularly high capital expenditure. Government gross fixed capital formation is projected by the European Commission to decline from 6.7% of GDP in 2026 to 6.4% in 2027 and 6.1% in 2028, after reaching 7.1% in 2025.
The programme includes major investments in transport infrastructure, energy, urban infrastructure and EXPO 2027-related facilities. The proposed framework would require projects to progress through defined preparation, appraisal, selection, implementation and evaluation stages, with the Ministry of Finance maintaining a central database and a formal role in the investment-management process. The draft also provides for monitoring of implementation plans and project rationalisation, alongside evaluation of results following completion.
