The FINANCIAL — The World Bank’s Board of Directors approved the Second Serbia Health Project of US$40 million and the Deposit Insurance Strengthening Project of US$200 million for Serbia, according to the World Bank Group.
The Second Serbia Health Project aims at improving the efficiency and the quality of Serbia’s public health care system, while the Deposit Insurance Strengthening Project aims to strengthen the financial and institutional capacity of the Deposit Insurance Agency (DIA).
The entire population of the country will benefit from these two projects as they address systemic deficiencies in their respective sectors.
Total health spending in Serbia accounts for about 10.4 percent of GDP. It is critical for Serbia to increase the productivity of its health spending, particularly given an environment of fiscal constraints and increasing demands for health care from an ageing population. To address these issues, the Second Serbia Health Project will support the improvement of health care financing and efficient purchasing of pharmaceuticals and medical products, according to the World Bank Group.
In addition, the project aims to improve the standards of quality and efficiency of care in the Serbian health sector through two main approaches: strengthening quality improvement systems; and modernizing cancer management at selected tertiary facilities.
The Deposit Insurance Fund of Serbia was depleted by several recent bank failures. The Deposit Insurance Fund covers depositors in Serbia of up to 50,000 Euros in the case of a bank failure. The depletion of the Deposit Insurance Fund creates risks to the Serbian financial system due to the possibility of it not having adequate resources to cover insured depositors. Bank failures, even of a small size, have the potential to shake confidence in the entire banking system if depositors lose confidence in the security of their deposits.
Ensuring confidence and continuing to develop the financial sector in Serbia is a critical part of the agenda of ensuring shared prosperity in Serbia. Access to credit remains a major issue in Serbia as credit growth continues to be much lower than prior to the 2008 global financial crisis. Research has shown that increasing confidence in a financial system can lead to an increase in the amount of domestic savings that can be mobilized for more productive uses, which, in turn, can lead to increased growth and job creation, according to the World Bank Group.
Significant support is also provided to strengthen the institutional and technical capacity of the Deposit Insurance Agency. In addition, a unique aspect of the project is that disbursements of financing for the Deposit Insurance Fund are linked to the achievement of measurable outcomes.