National Bank of Serbia Governor Resigns

Belgrade, March 25, 2010 (Source : Beta) - National Bank of Serbia Governor Radovan Jelasic submitted his resignation to the bank's Council yesterday, the central bank said in a news release. According to the news release, in a note to Council Chairman Dejan Soskic, Governor Jelasic said the resignation was irrevocable and he was submitting it for personal reasons. "I request that, in line with the Law on the National Bank of Serbia, you launch a process before the Serbian parliament's Finance Committee, which will determine that conditions have been created for the cessation of the duty of governor before the end of his mandate," Jelasic said in his resignation. Jelasic previously told a news conference that he will occupy the post of governor until the parliament appoints a new one, adding that he will not change his decision. The governor also said he has already informed Prime Minister Mirko Cvetkovic and President Boris Tadic of his decision, and the two officials marked his work so far positively. Jelasic added he does not have a new job offer and has yet to decide where he will work in the future and whether he will stay in Serbia. The parliament appointed Jelasic as governor for the first time on Feb. 25, 2004. After the adoption of the new Constitution and Constitutional Law on Sept. 26, 2007, Jelasic was given a new five-year mandate. Prime Minister Cvetkovic said that he was sorry to see Jelasic resign. Cvetkovic told BETA that Jelasic had told him he would resign, but had not gone into detail regarding the personal reasons for this. He added that relations between the central bank and the government have been good, despite occasional disagreements, which were resolved "in a constructive manner."

Unions against Telekom privatization

Belgrade, March, 24. 2010 (Source : Tanjug) -Telekom Srbija unions have appealed to the state not to privatize the state-owned telecommunications company. According to them it is one of the last remaining successful companies in the country. Representatives of the unions from Republika Srpska, Montenegro and Serbia have signed a cooperation agreement and formed a coordinating body in order to improve the conditions of the company and its employees. Although Serbian Prime Minister Mirko Cvetković said on Sunday that Telekom privatization may be carried through by selling a part of the shares while having the state keep the other part, the unions warn that the company may pass into private majority ownership even if the state sells only five percent of the company's shares.

Telekom union President Miroslav Joksimović explained that the Greek telecommunications company OTE holds 20 percent of the capital shares in the Serbian Telekom, while the citizens, current and former employees hold about 25 percent. This means that 45 percent of the shares are currently not in state ownership, and if additional 5 percent are sold the state will no longer be the major shareholder, Joksimović said. Telekom Srbija union President Slavoljub Kandić warned that the transfer of the company to majority private ownership would mean a rise in the price of services, similar to the rise in phone subscription costs after the Norwegian Telenor became the second fixed telephony operator. Kandić added that the transfer would also lead to lay-offs.

Serbia "heavily indebted" country

Belgrade, March, 23. 2010 (Source: B92) - Serbia owes euro 22.8bn to foreign creditors, according to indicators of the world bank and international monetary fund. The national bank of Serbia and authorities are trying to play down the severity of the situation, claiming that Serbia is among the countries that have middle degree of indebtedness, where the debt's participation in the GDP is 74.1 percent. That is six percent under the mark that separates Serbia from countries in high debt, economist Mlađen Kovačević told daily Večernje novosti. He said that in the last two years, the state of foreign debt has drastically worsened, and that the taking out of loans will continue in this and the next year, which can lead to a long-term debt crisis. Kovačević also believes that the total debt needs to worry Serbia the most, even though the central bank insists that private debt, which is the debt companies have abroad, should not be taken into consideration. "i think that there is reason for concern. What will happen if Telekom Serbia, (the state-owned telecommunications company) has problems and is not able to pay off its loan? The scenario is simple. Citibank or any other creditor the company is indebted to can take over our national company at a minimal price,” Kovačević said. He explained that the ability to pay off loans will depend mostly on the strength of the industry, which is the only source that can secure foreign currency. “As far as the state is concerned, it can always find a way to regulate its obligations. It can reprogram debts, take out new loans, which it has been doing for years. But that also has a price,” Kovačević said, adding that Serbia owes euro 6bn based on interest alone for a period of four to five years. He believes that the state will be going even further into debt. “There are already indications that the Chinese will give euro 1bn of loans, and the Russians will give euro 800mn. The sale of Telekom is also being announced by the end of the year, at a time when the crisis is still shaking Europe, Which means that a lot less money can be gotten for the company than during better times,” he said.
"The state is continuing to spend its 'family treasures', to sell out everything it owns. The privatization of EPS (electric company) is also being mentioned, with the Czech as the main interested party, in other words, a state institution. How could it possibly be that a foreign state company can handle things better than ourselves in our own house," this expert wondered. "Since January 1, 2001 until today, the state took euro 70bn based on privatizations, foreign loans… where that money went, i cannot see. In nine years, we have not built a single new bridge, corridor 10 has not been finalized, nor any other investment of any significance," Kovačević added. He also noted that Serbia's situation is "not far from the Greek scenario", because Serbia is spending "25 percent more than it earns".

Government unanimous regarding economic policy

Belgrade, March, 22. 2010(Serbia Today) – Serbian Prime Minister Mirko Cvetkovic said that from a strategic point of view, Serbia needs an export-oriented economy because that is the model for all developed countries of similar size. In an interview for today’s edition of the Politika daily, Cvetkovic stressed that if Serbia wants to continue its development, it has to found it on non-tradable goods. He added that this is an ideal situation for investors who do not place their faith in ratings to come to Serbia and do well in business. It is my impression that we have made a huge step forward, but I also believe that our people lack optimism, because we had had a long period of negative scenarios. It is only recently that good things started happening to us, but it will take some time for the people to gain self-confidence, the Prime Minister said. He noted that it would be a good move to sell Telekom this year, adding that by abolishing the monopoly on landline phone the need to privatize Telekom arose. Telekom will be sold at a tender. However, I am more inclined towards the option which implies the sale of one part of Telekom now, while the other would remain state-owned, Cvetkovic noted. The Prime Minister announced that on 31 December the monopoly over the oil and oil derivatives market will also be abolished, regardless of the protests by Russian partners in the Serbian oil industry NIS. He announced that the government is stable and of one mind when it comes to the implementation of the country’s economic policy, adding that 2010 will be much better than last year, though the change for the better may not yet be felt in the actual life. The government has to rely on the social aspect, create additional demand and help people, Cvetkovic noted stressing that the government will contemplate any ideas put forward by employers and unions. Whenever employers and unions reach an agreement the government will accept it. It will also with great pleasure take into consideration all ideas proposed jointly by unions and employers, he noted. The Prime Minister stressed that the Greek scenario will not happen to Serbia since the situation with its public debt and the control over it is perfectly clear. Our public debt refers only to loans for infrastructure projects. We did increase our public debt in 2009 and it rose to 32%, but we must not forget that a part of it was redirected to budget reserves which currently amount to around half a billion Euros, he explained. As for cooperation in the region, Cvetkovic said that Serbia wants to maintain cooperation with all countries and make friends, not enemies.

Dinkic announces forming SME business council

Belgrade, March, 20. 2010 (Serbia Today) – Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic announced that the Ministry will establish a business council for small and medium enterprises (SMEs) next week in order to establish direct communications with this sector, which employs one million citizens in Serbia. Dinkic visited the small company Stublin in Stojnik near Arandjelovac, owned by Radovan Milojevic, who was declared the best entrepreneur in 2009. He said that the council will include the 80 most successful SMEs from all over Serbia.

The Serbian government wants and needs to help these entrepreneurs to expand their capacity and to expand the market and to employ more people, said the Minister of Economy and Regional Development. He pointed out that this sector employs most of the workforce and contributes to approximately 75% of GDP. Dinkic recalled that the state has provided soft loans for liquidity, which are intended for SMEs. He explained that the idea of establishing the SME business council is to tackle specific problems that these companies are faced with and also to increase their competitiveness. The Minister of Economy and Regional Development said that the council will include companies from different sectors, including the metalworking industry, bakeries, vulcanizes, the textile industry etc. Radovan Milojevic, who founded his company in 1993, was declared the best entrepreneur in Serbia for 2009 in an awards event held by Blic daily and Banca Intesa.

For better Economic relations between Serbia and Poland

By Milen Vesovic
Belgrade, March 19, 2010 (Serbia Today) – The Serbian Government announced that after a visit of a Polish Deputy Prime Minister and Minister of Economy Valdemar Pavlak to Serbia, he stated that: "Serbia and Poland have, as soon as possible, to reinforce an economic cooperation between the two countries".
The Polish official spoke to the Serbian Prime Minister Mirko Cvetkovic, Serbian Deputy Prime Minister and Minister of Economy Mladjan Dinkic and second Vice President (in charge of European integration) Božidar Đelić. It was concluded that it is necessary to promote the economic cooperation between Serbia and Poland in terms of increasing the volume of foreign trade, and in the field of investment, particularly in mining, energy and agriculture.

Minister "speaks in name of budget"

Belgrade, March, 18. 2010 (Source: B92) - Finance Minister Diana Dragutinović said that the state should try to have no budget rebalances this year and to keep wages and pensions at the same level.
She told daily Večernje Novosti that budget income is at the planned level and an increase in wages and pensions can be expected only if income increases significantly, stressing that she is speaking on the issue only in relation to the budget passed by the government. "I am not saying that there will not be an unfreezing (of wages and pensions), I am reading what is written in the budget. Nothing can be said for certain. I would like for us to have one budget in 2010. Not two. But for an increase in wages and pensions there would have to be a rebalance," she said. Dragutinović said that the problems of unemployment and the decrease in demand could be solved in part by tax reforms. She said that she personally supports an increase in taxes on spending and a decrease of taxes on wages, adding that this is "her personal vision of tax reforms, which does not mean that the government must accept it.

Unions waiting for answer from government

Belgrade, March, 17. 2010 (Source : B92) - Unions and employers are asking for a meeting with government officials to reach an agreement on key economic measures for 2010. The government has yet to address their request. The goal of the meeting would be to discuss measures for lessening the effects of the crisis which the citizens will continue to experience this year. “The Independent Union is expecting an answer from the prime minister today on the demand submitted for a joint meeting with business and union officials. The main topic will be the economic ambient in Serbia and efforts to get out of the crisis. The consequences of the current ambient in Serbia are small wages, a lot of unemployment, small pensions,” Independent Union President Ljubisav Orbović told B92. Orbović said that the government is not leading a clear economic policy, which is why a social crisis is possible. “I believe that in this moment, we have no knowledge of what direction Serbia is heading in. The position we are in shows that the crisis will be greater and greater, and a third kind of crisis is approaching, a social crisis, where more people would be made redundant, which is not sustainable and cannot be accepted. We are offering a joint meeting and joint solution and to reach a joint agreement,” Orbović said.

Average monthly budget per household RSD 47,582 in fourth quarter of 2009

Belgrade, March, 16. 2010 (Serbia Today) – The Serbian Statistics Office stated that in the fourth quarter of 2009 the average monthly budget per household in Serbia stood at RSD 47,582.

The statement adds that 94.9% of the total available funds is monetary income and 5.1% is income in kind. The largest share in monetary income is recorded with citizens with regular jobs, ie 45.8%, and 33.8% with pensioners. Personal expenses in households in Serbia amounted to RSD 44,886, of which the largest part was spent on food and non-alcoholic beverages (40.7%).

Infrastructure development necessary for fast growth

Kopaonik, March 13. 2010 (Serbia Today) – Minister for the National Investment Plan (NIP) Verica Kalanovic said that all post global economic crisis development models for Serbia make infrastructure development a priority and a necessity for quicker growth.

In a statement to Tanjug news agency from the Kopaonik Business Forum 2010 Kalanovic said that from this year on only infrastructure projects will be financed with NIP funds and no financing will be provided for maintenance costs, equipment, consulting, subsidies and soft loans. Compared to 2009, the number of NIP projects has been reduced and procedures almost identical to World Bank procedures are being followed, said Kalanovic. She said that this year around RSD 26 billion will be at the NIP’s disposal, of which sum RSD 15.5 billion is from the budget and RSD 10 billion from the European Investment Bank’s project loan. Kalanovic stressed that a new model for project realization and management is needed, namely one that implies partial management modernization at the central level, through the work of ministries and the transformation of certain institutions. The Minister said that the realization of projects in Serbia is still slow, even though progress was achieved both in 2009 and 2010. She also emphasized that the government goal is to create preconditions to enable project realization over a few months, starting from the day when the funds are approved.

Serbia needs 2 pct. GDP growth

Kopaonik, March 11, 2010 (Source: Tanjug) - PM Mirko Cvetkovic told the Kopaonik business forum that country cannot get out of the economic crisis without a GDP growth of over 2 percent. He added that the key challenges in 2010 will be to stop the increase in unemployment, revive domestic demand and achieve macroeconomic stability.
“ If we do not achieve a growth higher than 2 percent, this year will be similar to the year of the crisis and we will have no sense of improvement”, said Cvetkovic, Nothing that the country needs a continuous growth of 5 to 6 percent annually for it to move forward. The prime minister said that there is no reliable data that would suggest with certainty that Serbia has come out of the crisis, but that there are a number of indicators for that, like the 31 percent increase in export in the first two months of 2010, which inspires optimism.
According to Cvetkovic, stimulating export oriented sectors of the economy, attracting strategic investors and improving Serbia”s rating are also key to the country's economic recovery. The government goals in 2010 will be to strengthen economic activity, maintain stability of the Serbian dinar, reduce public spending, prevent an increase in poverty, continue the public sector reform, work on harmonization with European standards and fight crime and corruption. Cvetkovic pointed out that the 3,7 percent growth in industrial production in January,the said high increase in export and the 1,5 percent growth of the composite index also in January all point to positive trends since the start of 2010 and signal a signal a growth of GDP.
The negative indicators, according to Cvetkovic, are the fact that budget revenue was lower than had been planned for the first two months of this year and the continued drop in domestic demand over the same period. Cvetkovic stressed that the government has no trouble formulating the economic policy, but that it has problems coping with conflicting interests that appear as part of that model, and he asked for assistance from companies and economic experts in dealing with those. As an example, Cvetkovic stated the government’s intention to raise demand while reducing public spending, which is the prime source of demand. As another example of such conflicts, he described the necessity to improve the living standard and increase salaries while maintaining a restrictive budget. Cvetkovic announced over RSD 160BN of investments by the government and public enterprises in 2010, a RSD 4 BN fiscal stimulus to support the construction and purchase of new apartments, measures to stimulate export and support in conquering new markets.

Employees of SIK Kopaonik get their first salaries after production recovery

Kursumlija, March 10, 2010 (Serbia Today) – Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic said in Kursumlija today that €8 million will be invested in the Forestry and Industrial Complex (SIK) Kopaonik by autumn. At the initiative of the Ministry of Economy and Regional Development, the production in this company was restarted in February and thus 300 workers of the company got their first salaries after more than 20 months. By the end of March, this company will also receive a loan from the Development Fund, on the basis of a recently adopted programme of the Serbian government for production revival and employment in economically devastated areas of Serbia, the Minister said after visiting SIK Kopaonik. He recalled that Kursumlija belongs to a group of 40 municipalities in Serbia whose level of development is approximately 50% of the republic’s average. The Ministry of Economy and Regional Development has earmarked €100 million for the promotion of balanced regional development through the revival of production and employment in the poorest municipalities in Serbia, he said. He said during his visit to Kursumlija that a great opportunity for the development of this part of Serbia lies in spa tourism, which is confirmed by resorts such as Prolom and Lukovska Banja which have great potential. However, Kursumlijska Banja has not been in operation for 15 years and a tender will be called to invite investors to cooperate with the state to revive it, said Dinkic.

The offer will include a debt write-off and the state will be a partner in the new company, while the renovation of the hotel will be the investor’s obligation, he explained. An agreement should also be reached with pension and disability insurance funds and trade unions which would use the services offered by the resort, he said. Since there are plans for beginning the construction of a motorway from Nis to Prokuplje next year and Djavolja Varos is a big tourist attraction, I think we must revive resorts and spas. The state will work on the infrastructure and provide personnel qualified for running resorts, he said.

Serbia, Algeria to improve economic cooperation

Belgrade March 04, 2010 (Serbia Today) – Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic and Algerian Minister for Water Resources and Co-Chairperson of the joint committee for economic cooperation with Serbia Abdulmalek Sellal stated on Tuesday that Serbia and Algeria must improve economic cooperation.
Dinkic, who is heading a Serbian delegation on a three day visit to Algeria, said during talks that cooperation should be restored to the level at which it was during the 1980s, when as a member of the Non-Aligned Movement, Algeria was one of former Yugoslavia’s top economic partners. Speaking at a meeting, which was also attended by representatives of Algerian and Serbian businesses in the area of water resources, Dinkic stressed that the Serbian delegation’s visit is a great opportunity for Serbian companies to work in Algeria, which is one of the richest North African countries and is planning to start a $150 billion, four year, investment cycle. The Serbian delegation also includes Defense Minister Dragan Sutanovac and Minister of Youth and Sports Snezana Samardzic-Markovic, who met today with their Algerian counterparts. During this visit, Dinkic will meet with Algerian Prime Minister Ahmed Ouyahia, and he will also have separate meetings with five ministers and the governor. The Serbian business delegation is represented by some 60 representatives of leading Serbian companies. A business forum will be held tomorrow at which businessmen of the two countries will discuss future cooperation. The football national team of Serbia also arrived to Algeria together with the Serbian state delegation and they will play a friendly match with the Algerian national team tomorrow.

Serbia successfully implements interim trade agreement with EU

Belgrade, March 04, 2010 (Source: serbiangov.rs) – Deputy Prime Minister for EU integration Bozidar Djelic stated at the first session of the Committee for Implementing the Interim Agreement on Trade and Trade Related Issues with the EU that Serbia has been successfully implementing the agreement for 14 months.

Djelic, who chaired the first session together with Director for Western Balkans in the European Commission's Directorate General for Enlargement Pierre Mirel, said that this is a huge success for the Serbian government and Serbian citizens. He said that today Serbia has formally established the contractual-partner relation with the EU, adding that European and Serbian interests have been contemplated and compared for the first time at the session. The interests of Serbian producers will be protected from now on in the EU market in the same way in which European producers are protected in Serbia, Djelic said adding that the meeting also looked at trade with the EU and fulfilling tariff quotas for Serbian exports. The Deputy Prime Minister recalled that Serbia exports 80% of its goods to the EU, while over 75% of imported goods in Serbia come from the EU. Even so, there was a fall of 25% in the trade volume with the EU in 2009, Djelic said adding that the crisis did not affect the agricultural sector, in which Serbia made a surplus. He also stressed that Serbia is the only country in central and south-eastern Europe to have attained a surplus in agricultural exchange with the EU in 2009, which doubled in comparison with 2008. The quota allocated for the export of baby beef from Serbia to the EU has not been fulfilled, since only 12% of the total approved amount was exported, while 8% of the quota was used for the export of wine and the export of fish was also below the quota.
Djelic said that only export quotas of over 180,000 tonnes have been met for sugar. He said that it is not understandable that Serbia has the same quota for sugar exports as Croatia, since Croatia produces less sugar. The Serbian Deputy Prime Minister said that the citizens of Serbia seeking political asylum in EU countries will be returned to Serbia in accordance with the agreement on readmission, while the organizers of such transport will be punished. Djelic said that Serbia will not tolerate those who through their actions want to jeopardise the crucial freedom of all citizens of Serbia. He said that an attempt to abuse of the liberal laws of Belgium with regard to political asylum in no way implies the action of the state. The Deputy Prime Minister reiterated that Serbia was aware of the fact that the liberalisation of visa regime is not only a privilege but also an obligation. Mirel said that people who abuse the possibility to travel without visas hamper the reputation of Serbia, and reiterated that travel without visas does not imply a work permit. He said that there is a large number of people misusing this circumstance, which indicates that there is an organised group behind. Political asylum is sought by people who come from non-democratic countries and Serbia is a democratic country, concluded Mirel.

Prime Minister Mirko Cvetkovic calls for support for dinar

Belgrade, March 02, 2010, (Serbia Today) – Prime Minister of Serbia Mirko Cvetkovic said that the state must support the domestic currency. He said that the decision for the state subsidizing credit in Euros should be reassessed and that the state should “turn towards packages from business banks that are meant for crediting in dinars.” Cvetković told Belgrade daily Večernje Novosti that the citizens will have more trust in the domestic currency when inflation is not six, but two percent. “The decrease in the value of the dinar is felt most with citizens who are indebted in Euros and getting paid in dinars, and their buying power decreases,” he said. Cvetković said that there could be increases in wages in the public sector in some percentage or one-time payments in the second half of the year “if significant economic growth is achieved.” He said that “in the next several years, the cost of pensions will be about 10 percent of the BDP, as it was agreed with the IMF.” The prime minister said that the government has chosen to harmonize pensions with the growth of wages in the public sector over the next 18 months, stating that this period is enough time to take care of the consequences of “the two-year status of frozen pensions.” He said that while he worked in the Privatization Agency, he never heard the names that are being mentioned now in cases of alleged abuses in privatization processes, and that his stance is clear on that because he has initiated several processes against such people who abuse privatization procedures since he became the prime minister. Cvetković said that he does not believe that the privatization of Jat Airways will be completed this year, but that the government will be speaking with air travel companies and investors who have a clear investment plan for the company and will decide on what companies could be good strategic partners.

Police intervene against protesters in Belgrade

Belgrade, March 02, 2010 (Serbia Today, B 92) - About thirty workers of a former Serbian Railways company who have been blocking the main railway station in Belgrade have been "moved from the tracks” according to Serbian media B 92. According to reports, MUP officers intervened to remove the protesting women from the railroad tracks, and are now preventing them from going back. The intervention was unmarked by any incidents, reports said. The protesters, all from the Nega Kola company, earlier stranded both incoming and outgoing trains. A number of local trains, and those traveling on international lines from Sofia, Budapest and Sarajevo were delayed this morning. The protesting workers are demanding payment of overdue wages, and for the company management to be replaced.

Unused advantages of Free Trade Agreement with Russia

Belgrade, Feb. 25, 2010 (Source: Tanjug) - Serbian Chamber of Commerce (PKS) President Miloš Bugarin said that Serbia has failed to fully exploit the advantages of its free trade agreement with Russia.“The quantity of goods and continuity of their delivery by Serbian exporters have not met the demands of the huge Russian market”, Bugarin told the Tuesday edition of Belgrade daily Blic. Asked if the political situation in Serbia is the reason why the Russian Duma has still not ratified the agreement, Bugarin said that “what is important for Serbia's export economy is that the arrangement can be implemented in full.” Bugarin said “Serbia needs to focus on the customs union which will be formed by Russia, Belarus and Kazakhstan and which will create a market of 200 million consumers.” “If we could up production both in Serbia and the region, the sky would be the limit for food exports to this market. The trade liberalization is far greater with Belarus than with Russia, and it is time we start negotiating free trade with Kazakhstan,” Bugarin assessed. Bugarin said “energy is the cornerstone of Serbia and Russia's strategic cooperation, and that this does not comprise only the privatization of oil company NIS, but also the South Stream gas pipeline, the oil pipeline, the gas storage in Banatski Dvor and the establishment of a mixed company for insurance and risk sharing in the Serbian and Russian markets.” There is also talk of building hydropower plants and restoring thermal power plants. “Serbia must improve its energy efficiency, because it ranks lowest in Europe,” Bugarin said.

IMF Reaches Staff-Level Agreement with Serbia on Third Review of Stand-By Arrangement

Belgrade, Feb. 25, 2010 (Source:  IMF Press Release No. 10/57 ) - An International Monetary Fund (IMF) mission, led by Albert Jaeger, met with with the Serbian authorities during 9-23 February 2010 as part of the third review of the country’s Stand-By Arrangement (SBA) and the 2010 Article IV consultation. At the conclusion of the visit, Mr. Jaeger made the following statement in Belgrade:
“An IMF staff mission and the Serbian authorities have reached agreement, subject to approval by the IMF Management and Executive Board, on the completion of the third review of the SBA. We expect the request to be considered by the IMF’s Board in late March. Completion will allow Serbia to draw €350 million to support its external reserve position.”
“The program is performing well: all key quantitative targets have been met, most of them with a considerable margin, including the target on the fiscal deficit, which was 4¼ percent of GDP in 2009. Progress is also being made in the structural areas, such as the reform of the pension system, the design of the fiscal responsibility legislation, and the corporate debt collection and restructuring framework. Encouragingly, with the global economy stabilizing and foreign banks remaining strongly committed to Serbia, the economy is starting to recover. We project a modest GDP recovery in 2010 and 2011 of 2 and 3 percent respectively. Inflation is falling broadly as targeted.“Despite these welcome trends, economic challenges remain substantial. Unemployment is high and rising, output and investment remain weak. This is insufficient for a perceptible rise in living standards. Recent events show that Serbia cannot afford a return to the pre-crisis model of growth based on high consumption and low domestic savings and low exports. The key challenge is to undertake growth-oriented structural reforms.“The public sector should reduce its high claim on resources while taking the lead in realizing the needed economic transformation. Thus, the 2010 budget should be tightly executed in line with the deficit target of 4 percent of GDP, focusing on expenditure restraint. This should free the room for essential public investment, with well-targeted social spending being protected. Further steps to anchor this strategy are expected to be specified in the discussions of the next review. “The mission also discussed scope for further monetary easing, plans for streamlining reserve requirements, and the exposure floors for foreign banks under the Bank Coordination Initiative. Additionally, it reviewed opportunities for reducing Serbia’s high level of Euroization.”

Spanair will start Belgrade to Barcelona flights in April

Belgrade, Feb.24, 2010 (Serbia Today) - Spanish air carrier Spanair is scheduled to begin a direct Belgrade-Barcelona service, with the first flight expected to take off on April 15. Return tickets are expected to cost EUR 169, and can be purchased through the company's website. There will be three flights a week – on Tuesdays, Thursdays and Saturdays, Belgrade daily Blic reports. Spanair will fly Airbus A320 planes with 156 seats on the line. Belgrade will then enjoy direct flights to Spain for the first time in 18 years. Spanair is a Barcelona-based company, and is not considered a low-cost carrier although low ticket prices can be likely be bought at opportune moments. “We have concluded by detailed market analysis and interviewing passengers that what's missing the most regarding the offer of the Belgrade airport were direct flights to Spain,” said Director of Nikola Tesla Airport Velimir Radosavljević.“We are glad that the lifting of visa regime, expanding the capacity of our airport and meeting requests of air carriers have all contributed to attracting Spanair as another in a series of air carriers,” he said. “The goal is to have two flights from Belgrade to Spanish cities every day. I have Barcelona and Madrid in mind primarily, but in the summer season, also to Valencia, Malaga and Palma de Mallorca. The conditions have been fulfilled for charter flights this summer not only to Palma, but also to Alicante and Costa Brava (Girona),” Radosavljević added. With this announcement, many companies have started offering lower prices for connecting flights from Belgrade to Barcelona. The lowest price offered by Lufthansa is EUR 200, but the lowest price is being offered by SWISS with tickets starting from EUR 158. This, however, is only for those who plan to travel in early May.

Serbia needs public-private partnership for development of infrastructure

Belgrade, Feb. 23, 2010 (Source: serbiangov.rs) – Deputy Prime Minister Bozidar Djelic said today that Serbia needs public-private partnership for building local infrastructure which will attract foreign investment and quality communal services, higher employment rates and a rise in living standards as well. Speaking at a seminar on public-private partnership in infrastructure, organized by the World Bank (WB) office in Serbia, Djelic said that it is necessary to pass the appropriate legal regulations to facilitate development of this partnership. He added that amendments to the Law on Concessions should be adopted in the middle of this year. The existing Law on Concessions is suitable for large national projects, but it cannot satisfy the needs of local projects.
Djelic noted that representatives of the Serbian government, local self-government and WB agreed at a meeting held this morning at the Serbian government to initially work with smaller projects, for recycling and processing of waste waters, which would be at the same time linked to electricity production plants. WB expert Jose Luis Guasch said that public-private partnership can and should be a powerful instrument for investment in infrastructure. He explained that it can generate jobs and increase household income, particularly in highly indebted countries, such as Serbia. He observed that Chile and Korea have been the most active in promoting public-private partnership with 70% and 90% respectively of all projects there realized through that form of cooperation.
Guasch said that this form of partnership is mainly used in the field of traffic, water supply and sewage systems, waste collection and disposal, city traffic and building of schools and hospitals. The seminar was opened by head of World Bank office in Serbia, Simon Grey.

Serbian Dinar hits new low

Belgrade, Feb. 22, 2010 (Serbia Today) - When banks open on Monday, February 22, the domestic currency will be at its lowest value compared to the Euro since the introduction of the European currency in 2002. One Euro will be worth RSD 98.9293 on Monday. This decrease in value will occur despite interventions by the National Bank of Serbia, which sold an additional EUR 10mn on the foreign currency market in an effort to avoid further drops in the domestic currency’s worth. The NBS has sold EUR 371.5mn thus far this year in an effort to stabilize the exchange rate. In 2010, the dinar was at its highest rate on January 4, at which time one euro was worth RSD 95.9679.

Diana Dragutinovic: “No problems in talk with IMF”

Belgrade, Feb. 20, 2010 (Source Tanjug) – Serbian Finance Minister Diana Dragutinović said that she does not know where the media heard that there are problems in the ongoing IMF negotiations. Dragutinović said at a press conference that government representatives are not concerned over this stage of the negotiations because, as she pointed out, Serbia "has fulfilled all its obligations" to the International Monetary Fund (IMF). She said that this is the second week of negotiations, and that the most important issue is pension system reform. Official talks between IMF delegates and the Serbian government, as part of the third review of the stand-by arrangement, started with a plenary session on February 9 and will continue until February 23. In the talks so far, IMF has rated positively the government's realization of the stand-by arrangement obligations, including the successfully conducted measures to alleviate the adverse effects of the crisis, macroeconomic indicators which are better than in other Eastern European countries, and the pension system reform activities to date. On May 15, 2009, the IMF approved a new stand-by arrangement for Serbia, worth EUR 2.9bn, for the strengthening of foreign exchange reserves. Two installments of the loan, totaling EUR 1.12bn, have been withdrawn so far. The IMF agreement requires Serbia to cut down budget spending on public employee salaries and to keep the salaries and pensions frozen in 2010. The agreement also envisages layoffs in the state administration and the adoption of a new pension and disability insurance law.