The Government of Serbia is in this document presenting its agenda for reform and its needs for international support for the year 2001. The Agenda constitutes our input to the joint World Bank and European Commission sponsored Donor conference in Brussels on June 29 2001. It is hoped that it will help in coordinating international assistance through 2001.

There is now a unique window of opportunity to further the process of democratisation, peace and stability both in Serbia and in the whole region. In this Agenda, the Government is presenting:

- An overview of the current development situation in Serbia and its social and economic agenda for accelerated recovery from ten years of erratic rule, neglect, sanctions and political turmoil in the region (Part 1)

- Its detailed strategies by sector and issue (Part 2)

- Proposed priority programmes and projects for external financing to contribute to the implementation of these strategies (Part 3)

The Agenda presents an accelerated reform programme to bring Serbia into the mainstream of European development and make it a key factor for peaceful development in the region.

To implement this programmes, the Government is asking the international community for financial assistance in 2001 totalling close to $ one billion. This will be targeted at:

- Economic reform, including the continuing effort to reform the legal and institutional framework

- Rehabilitation of basic infrastructure

- Securing social safety nets for the most needy and vulnerable and resettlement programmes for refugees and IDPs

The Government's request is consistent with that put forward by the World Bank in the Economic Reform and Transition Programme (ERTP), but includes also areas not fully covered by the ERTP and provides more detail in programmes and projects.

The economy of Serbia has been disastrously distorted and destroyed by ten years of turmoil following the dissolution of SFRY. The credibility of its democratic and judicial institutions is only now being restored. The momentum of the reform movement now urgently needs the support of the international community to make it possible to rehabilitate the basic infrastructure and economy and to reform the legal framework and the financing of social systems.

The Government is firmly determined not to allow Serbian society to become dependent on aid, but rather to recover our institutions as soon as possible to a state of a normal, democratic functioning. The needs are therefore those of economic recovery and transition, and we are not starting from a scratch position. We therefore look upon the international support as an investment that will quickly yield high returns.

The signs are already in evidence that the reform programme is working: a number of critical laws, e.g. on privatisation, have been passed or revised and more are in the process of being reviewed and revised; inflation has been reduced dramatically; the currency has remained stable; foreign reserves have increased significantly; and part of arrears in child allowances have been paid. The support for emergency aid pledged at the last Donor conference in December has safeguarded essential needs of the most vulnerable of the population and created a favourable support base for the reform agenda.

The reform agenda focuses on three main areas:

1. The establishment of the State ruled by law;

2. Renewal of the economy;

3. Fighting poverty and establishment of social protection for vulnerable groups.

In Part 2 of the document the Government is presenting our policies and strategies for the various sectors and the priority needs of each sector. The need for reform of the legal framework to support deregulation and liberalizing of the economy is a crosscutting theme that permeates virtually all sectors. Special priority has been given to the social sectors, where public financing systems were allowed to deteriorate, almost beyond repair, to protect the most vulnerable groups.

A number of sector strategies, including energy, transport and communications are targeted at restoring, modernizing and upgrading the capacity of the infrastructure to support the needs of a new economy. Privatisation of state and socially owned enterprises is essential for restoring competitiveness to the economy, and is starting with the targeting of the 28 most efficient state companies for early privatisation. The banking and financing sector requires urgent attention to be able to fulfil its function of supporting these emerging and reconstructed enterprises.

Part 3 identifies a set of 36 top priority programmes and projects, with a total external funding requirement for 2001 of some $650 million. Additional high and medium priority projects to be implemented in the medium term and totalling over $3.5 billion are also listed in that Part 3.

The social, energy and transport sectors have been targeted as the most urgent areas for support, accounting for almost half the total amount already committed and/or requested.

A series of programmes have been identified as top priority for restarting the economy:

- The Bank Restructuring Programme

- Support to the Judiciary Costs

- Capacity Building for the Privatisation Agency

- Preparation of 28 SOEs for Privatisation

- MIS Development for Tax Management

- Review of the Information Technology Legislation and Organization

- Financial Services for SMEs

- Introduction of Government Programme

- Oil and Gas Rehabilitation

- TA for Energy Sector Project Preparation

- Spare Parts Programme for the Coal Mining Industry

- Rural Financial Services Programme

- Transitional Agricultural Input Supply Programme

- Budget Support/Counterpart Funds

Equally, to restore the capacity of basic public services, the following top priority programmes have been identified:

- The Municipal Water and Sanitation Programme

- Support for Electricity Imports

- Funding Electricity System Spare Parts

- Electricity Generation Repairs Programme

- Rehabilitation of District Heating Programme

- The National Road Repair Programme

- The Rail Line Revitalization Programme

- The Rehabilitation of the Ostruniza Rail Bridge

- The Reconstruction of the "Sloboda" bridge

- The Rail Signalling Revitalization Programme

- Modernization of Highway Traffic Control

- Urgent Support for Border Crossing Control

Among the key programmes that are being put forward to this conference for the social sectors are:

- The Financial Assistance Programme for Pensioners

- The One-off Payment Fund for the New Poor

- The Transition Fund for Redundant Labour

- Support for Urgent Health System Supplies and Repairs

- The Refugee Resettlement Programme

- Kolubara Region Earthquake Rehabilitation and Renewal

- The Southern Serbia Region Development Programme

- Education Sector Reform Strategy Development

- The Professional Development of Teachers Programme

- The Revitalization of Education Facilities Programme

Individual programme/project presentations for these top priority programmes are found in Part 3 of the Document.