Serbia has allocated RSD740 billion for capital investment in its 2026 budget, equivalent to 6.7% of GDP, as construction accelerates ahead of Expo 2027. Expo-related projects form part of a broader investment programme covering roads, railways, utilities, energy, healthcare facilities, digital infrastructure and urban development.
The investment programme comes as the IMF forecasts Serbian economic growth of 2.8% in 2026 and 4% in 2027, with Expo spending contributing to the acceleration expected in 2027. The construction programme is creating additional business for contractors, project financing and guarantees for banks, and demand for construction materials. New hotels, transport connections and public spaces are also being developed as part of the investment cycle.
Serbia’s accelerated construction programme is taking place alongside changes to procurement rules. Expo legislation and an implementing decree exempt projects covered by the framework from the standard public-procurement law. A separate decree selecting a strategic partner for a major solar programme also used an exceptional procurement mechanism.
A large market with limited competition
Public procurement accounted for 10.87% of Serbia’s GDP in 2024, while the value of contracts increased by 22%. The average procurement procedure attracted 2.5 bids, while 50.75% of procedures received only one offer. Contracts exempt from standard procurement rules had a combined value of €5.7 billion, including €1.2 billion awarded under intergovernmental agreements. The State Audit Institution identified irregularities covering more than one-fifth of the contract value included in its examination.
The figures do not establish that individual projects using special procedures provide poor value. They show the scale of procurement conducted with limited competition and the different conditions faced by companies participating in state-backed projects. Established contractors can absorb uncertain specifications, delayed certificates and informal coordination through their existing relationships with government institutions. Foreign companies entering the market may require a sovereign guarantee, an international partner or higher margins to compensate for additional risks.
Smaller Serbian suppliers can also become subcontractors within longer contracting chains, where payment conditions may be less favourable than the headline value of the underlying public project. Companies with specialised capabilities are positioned to participate in areas including rail signalling, electricity-grid equipment, water treatment, digital ticketing, venue technology, engineering assurance and lifecycle maintenance. Banks and insurers also have to distinguish between conventional public contracts and projects operating under exceptional legal and procurement arrangements when assessing financing and risk.
State-owned companies underpin major investment
Serbia’s state-owned enterprises are central to the country’s investment programme while also carrying significant operational and financial responsibilities. A governance law that entered into force in September 2024 is intended to strengthen the professionalism of ownership structures, management boards and reporting. The European Commission continues to describe practical progress as limited, with subsidies, political influence and temporary management arrangements remaining present.
Elektroprivreda Srbije (EPS) is responsible for maintaining reliable electricity supply while restructuring a coal-intensive power system. Elektrodistribucija Srbije is required to strengthen the electricity distribution network, while Srbijagas remains central to gas infrastructure and supply.
Roads of Serbia has accumulated domestic arrears significant enough for the IMF to require a stocktake, monthly reporting and a strategy for clearing the outstanding obligations. Telekom Srbija and Air Serbia operate commercially while remaining state-owned companies with broader policy objectives. The companies create different opportunities and risks for private-sector participants. Equipment suppliers and lenders value their scale and implicit state backing, while private competitors face concerns over differences in financing conditions, preferential access and changing objectives after contracts have been awarded.
Professional management boards, published performance targets and firm budget constraints would provide clearer conditions for both suppliers and competitors by reducing uncertainty and separating public-service obligations from commercial advantages.
Solar programme illustrates investment and procurement model
Serbia has used budget financing, bilateral agreements and strategic partnerships to mobilise capital for major infrastructure programmes. A 1GW solar and battery programme agreed with Hyundai Engineering and UGT Renewables illustrates the scale of projects that can be assembled through state-led investment arrangements. The programme’s exemption from ordinary procurement requirements also demonstrates the different procurement framework used for selected strategic investments.
The issue for EU convergence is not the construction of infrastructure itself. Serbia requires investment in transport, energy, utilities and other public assets. The institutional question concerns whether project appraisal, competition, recognition of debt and post-completion oversight are applied consistently across conventional tenders, special legislation and government-to-government projects. A motorway or exhibition district can be completed on schedule while still generating institutional costs if maintenance obligations, contingent liabilities or supplier arrears are not fully disclosed.
Expo 2027 is concentrating these issues within a major investment programme. Established contractors and state-owned companies have existing relationships and financial capacity, while companies with scarce technologies and specialised capabilities can compete in areas where the required expertise is less widely available. The performance of the resulting assets will continue to matter after the exhibition period ends, when hotels, transport infrastructure, public spaces and other facilities become part of Serbia’s longer-term infrastructure and economic base.
