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PROGRAM INFORMATION DOCUMENT (PID) 
CONCEPT STAGE 
Report No.:46891  
Operation Name 
Private and Financial Development Policy Loan (PFDPL) 
Region 
EUROPE AND CENTRAL ASIA 
Sector 
Banking (30%); Capital Markets (20%), Other Industries (50%) 
Project ID 
P096711 
Borrower(s) 
REPUBLIC OF SERBIA 
Implementing Agency 
Ministry of Finance (MoF) of the Republic of Serbia will be 
responsible for the overall implementation of the proposed 
operation. Other key ministries and agencies responsible for the 
implementation of the operation will include: Ministry of 
Economy and Regional Development (MOERD), Ministry of 
Mining and Energy (MME), Ministry of Infrastructure (MoI), 
Privatization Agency (PA), Deposit Insurance Agency (DIA), 
National Bank of Serbia (NBS), Elektroprivreda Srbije (EPS), and 
Naftna Industrija Srbije (NIS). 
Date PID Prepared 
January 1, 2008 
Estimated Date of 
Appraisal Authorization 
September 16, 2008 
Estimated Date of Board 
Approval 
March 19, 2008 
1.  Key development issues and rationale for Bank involvement 
 
The PFDPL series is designed to support the government in advancing its financial and private 
sector related reforms.  It builds on the reforms initiated under the earlier Bank-supported operations, 
such as the three prior private and financial sector adjustment credits (PFSAC-I, PFSAC-II and 
PPFDPC-I) and the structural adjustment credits (SAC and SAC-II). It is envisioned to be 
complemented by another DPL operation aimed at supporting the Government to address systemic 
public financial management issues.  The policy actions set in the PFDPL program will largely conclude 
the era of fast-track transition reforms in private and financial sectors of the Serbian economy. 
2. Proposed objective(s) 
 
The objective of the proposed PFDPLs is to support the Government of Serbia reform actions in 
three policy areas: (i) enhancing the business environment to encourage new business and to attract 
foreign direct investments (FDI); (ii) strengthening financial discipline by enhancing hard budget 
constraints in the enterprise sector through continued reform of SOEs and restructuring of public 
utilities; and (iii) building a more efficient and stable financial sector through continuing the divestment 
of state ownership in the banking and insurance sectors, strengthening prudential supervision of banking 
and encouraging development of the capital markets. 
3. Preliminary description 
 
The objective of the PFDPL will be achieved through reforms carried out by the GoS which are 
summarized in three pillars:  
 
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Pillar 1: Enhancing the business environment
:
·
Further simplification of business entry through the implementation of a single agency approach for 
business registration; 
·
Improving legal framework for strengthening corporate governance and facilitating business entry 
and operations; 
·
Streamlining regulations of business operations and reducing business compliance costs; 
·
Improving legal and institutional framework for competition; 
·
Strengthening the legal framework for mining concessions. 
 
Pillar II: Strengthening financial discipline
:
·
Improving financial discipline in the SOE sector;  
·
Privatization, restructuring and bankruptcy of socially-owned enterprises; and 
·
Continuing reforms in the energy sector; 
·
Establishment and development of State Audit Institution. 
 
Pillar III: Building a more efficient and stable financial sector
:
·
Privatization and divestment of state-owned banks (SOB) and financial assets (NPLs, insurance 
companies, equities, etc.);  
·
Strengthening insurance sector regulation and resolution regime, and;  
·
Enhancing prudential supervision of the banking (and microfinance) sector; 
·
Strengthening capital markets regulatory and supervisory regime. 
 
4. Environment Aspects 
 
The major pillars of the PFDPL have been screened with respect to the potential ramifications on 
the environment, forests and natural resources under the requirements of World Bank OP 8.60.  The 
principal concerns in the sectors supported under PPFDPL arise from the handling of environmental 
liabilities (e.g. water, air and waste emissions) from past and current operations. The project team will 
carefully review the possible effects of PFDPL on the environment and natural resources and propose 
actions aimed at mitigating any potential risk. 
 
5. Tentative financing 
Source: ($m.) 
Borrower 0 
International Bank for Reconstruction and Development 
500 
 Total 
500 
 
6. Contact point 
Contact: Irina Astrakhan 
Title: Task Team Leader, Lead Private Sector Development Specialist 
Tel: (202) 458-8243 
Fax: (202) 522-3687 
Email: iastrakhan@worldbank.org