BELGRADE, Feb. 20 (Xinhua) -- Despite its promising economic results, Serbia needs to continue with structural reforms and reduce fiscal risks, the European Bank for Reconstruction and Development (EBRD) said in its "Transition Report 2018-19" presented here on Wednesday. According to the report, Serbia should prioritize tasks related to unreformed state-owned companies and tax administration.

The annual EBRD report was presented at the National Bank of Serbia by EBRD Chief Economist Sergei Guriev to an audience comprised of government members, businessmen and academics.

In his presentation, Guriev explained that in the past year Serbia managed to achieve significant fiscal consolidation drawing on the support of a non-financial arrangement with the International Monetary Fund (IMF). However, he stressed that risks continue to exist.

The report highlights that Serbia returned to economic growth in 2018; notes further progress in the European integration process; and welcomes the reduction of the rate of non-performing loans to below 7 percent.

The EBRD recommends that Serbia should set several priorities for 2019. It should reform the public sector; improve the financing of small- and medium-sized enterprises; and make further efforts to support market transactions in non-performing loans.

Recalling that after years of operating at a deficit, Serbia in 2018 for the first time started to register a fiscal surplus and that public debt fell to 60 percent of GDP in June 2018, the report estimates that the business environment has remained "broadly unchanged."

According to the EBRD, the biggest gaps in the business environment are "market efficiency, institutions and innovation capacity," and only slight progress was seen in the reform of the tax administration and in the privatization and restructuring of state-owned enterprises.

"Serbia should improve reforms of the public sector, privatization and restructuring of state-owned enterprises, because unreformed companies create fiscal risks," said Guriev.

The EBRD's assessment matches that of the Serbian government in that the country's GDP growth will decline from 4.2 percent in 2018 to 3.5 percent in 2019, and will also be based on domestic consumption and investments.

Guriev concluded that "the overall message is optimistic," although according to the report major challenges await policymakers in order to implement the necessary reforms. Enditem

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