With its economy disrupted by the global economic crisis, the Serbian government faces tight budget constraints for several years to come. The Government has already responded by freezing wages and pension benefits and making cuts in capital works and other discretionary spending. These measures, while effective in the short term, are not necessarily sustainable over time. This report looks at more fundamental reforms in key public services, in order to identify opportunities for constraining expenditures through improvements in productivity. In 2010, the principal expenditure savings will instead continue to come from short term controls over expenditure aggregates: the freeze on pensions and wages and cuts in discretionary spending and capital works. The impact of the efficiency measures in this report will take more time to materialize. The Government should, nevertheless, make an immediate start. While the fiscal impact of these reforms will be evident over the medium term, their most important impact will be on the quality of public services. The reforms will stand Serbia in good stead even after economic growth resumes.