Matteo Colangeli, EBRD Regional Director for the Western Balkans

The drive for reforms and identifying partners dedicated to following international best practices has made Serbia one of the countries where we’ve invested the most

With new investments worth nearly €850 million last year alone, Serbia ranked among the EBRD’s five largest markets, alongside Turkey, Poland, Ukraine, and Egypt. “This means that, in relative terms, by unit of GDP or population, for example, we actually invested much more in Serbia than in those larger economies,” says Matteo Colangeli, Regional Director for the Western Balkans at the EBRD.

According to our interlocutor, this bank is a demand-driven institution that aims to act as an addition to commercial investors and to build sustainable market economies through the projects it finances. The two factors critical to its ability to scale up investment volumes in any given country are reform momentum and the identifying of partners committed to working in accordance with the required international best practices.

“A key enabler for us in 2023 was the acceleration of the energy transition in Serbia, a trend which we continue observing, alongside growing cooperation with the authorities in the areas of environmental infrastructure, innovation, and regional connectivity,” says Colangeli. “The other key partnership that we have developed in the country over the years is with the banking system, through which we channel over €300 million to the real economy annually, mainly to SMEs. I think all this makes for very solid foundations that should enable us to continue investing sizeable amounts in Serbia in the years to come.”

How does the EBRD’s new plan until 2028 envisage the building of green, inclusive and digitalised economies in Serbia?

— Our country strategy for Serbia focuses on the green energy transition, closing the infrastructure gap and unlocking the potential of the private sector, particularly SMEs. Accelerating the deployment of renewables will be at the core of the first priority, including by continuing to support the authorities in allocating capacities to private investors through transparent and well-structured auctions. We want to help Serbia attract strong investors and drive down the price of green energy for its economy through competition.

The other side of the energy story is cutting waste. There are significant opportunities and financial incentives available, particularly for investments in the efficiency of building stock. We will look to stimulate these through all channels: credit lines with commercial banks; by working with district heating companies; and by financing the upgrading of public buildings together with municipalities and the central government.

In terms of closing the infrastructure gap, the focus will be on strengthening Serbia’s rail network and significantly accelerating environmental infrastructure investments to improve standards of waste management, wastewater treatment and air quality in Serbian cities. Finally, in terms of private sector competitiveness, we will deepen our focus on innovation, creating opportunities for Serbia’s talented young entrepreneurs and helping traditional sectors of the economy like agriculture raise their standards and sustainability.

With the EBRD’s €300 million loan to EPS and technical assistance for energy sector reforms, what are the expected outcomes and how will they impact Serbia’s energy landscape?

— Our €300 million loan to EPS is aimed at shoring up short-term liquidity at a time of volatility and disruption to regional energy markets. The technical assistance package that we made available alongside that financing is being implemented at present and targets the improving of long-term resilience against future shocks to the company and the broader energy sector.

Moving ahead with the first renewables auction, for example, was part of that support and came together with more ambitious targets on the penetration of renewables in Serbia’s national energy and climate plan by 2030. EPS clearly plays, and will continue to play, a crucial role in the country’s energy system and in its transition. It is for this reason that we mobilised significant grant resources to provide technical assistance in a broad range of critical areas for the company’s performance, including corporate governance and risk management, as well as helping shape its long-term strategic direction through a decarbonisation action plan and related HR planning to develop the skills and know-how required for its implementation.

The EBRD has invested in innovation-enabling infrastructure, including science and technology parks. How do you see these investments contributing to Serbia’s overall economic development and competitiveness?

— Investing in innovation-enabling infrastructure is clearly key to the competitiveness of the economy and therefore a growing priority for us. We have been financing the rollout of broadband across rural areas of the country in recent years, thus creating the digital connectivity needed for businesses and entrepreneurs based in smaller communities to thrive.

We last year committed €80 million for science and technology parks in Niš, Čačak, and Kruševac, as well as facilities within the BIO4 project in Belgrade. Serbia is the first country where we support this type of infrastructure, which is a testament to the partnership we’ve developed with the authorities in the field of innovation.

Our country strategy for Serbia focuses on the green energy transition, closing the infrastructure gap and unlocking the potential of the private sector, particularly SMEs

This is a partnership that we stand ready to develop further, both in terms of additional investments and making access to technical assistance available to the expanding network of science and technology parks in order to continue raising their performance and delivery.

Beyond infrastructure, we are also engaging directly with local start-ups and accelerators through a programme called Star Venture, which aims to provide tailored access to international know-how and expertise. The aim is to help as many start-ups as possible grow to the stage at which they become interesting to international investors, ultimately creating a population of successful start-ups large enough to establish Serbia more firmly on the map for venture capital funds.

In terms of financing sustainable infrastructure and strengthening regional connectivity, what are the EBRD’s priorities for Serbia up to 2028, and how do these align with broader regional goals?

— We have a strong pipeline of important projects in railways and environmental infrastructure, in Serbia and around the region. For instance, we are financing the Belgrade-Niš high-speed rail link, which forms part of Pan-European Corridor X connecting Central Europe with Thessaloniki in Greece. This is our largest single investment in the country to date and was made possible thanks to Serbia’s decision to finance this key infrastructure with European partners, leveraging sizeable grant funding.

We are additionally supporting the rail sector in raising safety standards and providing comprehensive technical assistance to improve the governance and operational performance of state-owned rail companies. When it comes to the environment, we are financing a countrywide waste management programme with the aim of modernising several regional systems and increasing recycling rates. This is key to reducing pollution, creating opportunities in the circular economy, and moving Serbia closer to EU standards.

When it comes to air quality, our support is primarily focused on decarbonising district heating systems and buildings energy efficiency investments. We recently signed a €30 million loan (supported by substantial donor co-financing from the Swiss State Secretariat for Economic Affairs, the European Union, and the Government of Austria) to introduce advanced technologies – including solar-thermal, heat pumps, geothermal and waste heat recovery in the district heating networks of ten cities. Beyond finances, we also bring to the table project preparation and implementation support to ensure timely and efficient project delivery.

With our support, Serbia has built its credibility as a counterpart for public-private partnerships through the Belgrade Airport and Vinča solid waste facility projects, and we believe this model can be followed for other important infrastructure projects in which the leveraging of private sector finance and know-how is under consideration.

When it comes to intra-regional connectivity, would you say that Serbia is taking full advantage of all the possibilities at its disposal?

— I think Serbia has achieved strong progress in recent years, in terms of upgrading and expanding its transport infrastructure, and we are proud of the role we played in that. Belgrade Airport is establishing itself as a regional hub and a model of a successful public-private partnership. Road connectivity is being steadily improved domestically and with neighbouring countries. We are particularly pleased with the country’s growing strategic focus on the rail sector, as a greener and safer mode of transport. Together with the European Union and the European Investment Bank, we will continue investing heavily in the coming years, starting with the key European rail corridors. In parallel with infrastructure development, regional connectivity will also need to advance in terms of leaner border crossings, cutting bureaucracy and waiting times in order to boost trade and economic integration.

What distinguishes the EBRD from other institutional investors in the domains of infrastructure, green energy and other growth drivers?

— What distinguishes the EBRD is its private sector focus (around two-thirds of our annual business in Serbia) combined with strong engagement with the authorities on the reforms and infrastructure investments needed to unlock its potential. Another specific characteristic is our ability to provide a full range of financing solutions – from debt, to project finance and equity – to a broad spectrum of clients, ranging from large global investors to central and local government, state-owned enterprises, local corporates, and financial institutions.

Finally, I would mention our strong local footprint, with nearly 70 staff employed at our Belgrade regional hub, which enables us to deliver not only investments, but also advisory support (especially to SMEs and start-ups) and technical assistance, including to help the authorities design and implement the reforms needed to continue the country’s convergence with the European Union.