Dinar dropped again

Belgrade, June, 25 2010. (Serbia Today) - The value of the Serbian dinar (RSD) today dropped by another 0.17 percent. This came despite the National Bank of Serbia (NBS) intervention in the foreign exchange market worth EUR 20mn. The official exchange rate is RSD 103.7247 for one euro today, according to the central bank.  The NBS on Thursday sold EUR 20mn in the interbanking foreign exchange market in order to reduce the excessive oscillation of the exchange rate. Since the beginning of the year, the NBS has sold a total of EUR 1.208bn, including yesterday's transaction. The NBS announced this week that its foreign exchange reserves dropped by EUR 37.1mn in May and amount to about EUR 10.7bn at the end of May, while the nominal value of the domestic currency dropped 3.4 percent in the same period.

Minister Dinkic: No VAT increase in next two years

Belgrade, June 24. 2010. (Serbia Today) - VAT and payroll taxes will not be changed in the next two years, according to the statement of Serbian Minister of Economy and Regional Development Mladjan Dinkic "Taxes will not be changed by the end of this government's mandate," announced Dinkic on Monday. The reason for the Dinkic’s reaction was the announcements of the Finance minister Diana Dragutinovic of reducing the payroll taxes and increasing expenditure taxes. Dinkic said that the statement made by Finance Minister should be understood in a long-term context, adding that the idea is not so bad. "But, in view of the present situation and a relative acceleration of the revival of the Serbian economy, nothing should be changed now, but we should possibly think about it until after the economic crisis," concluded Dinkic.

No official decision on bonuses for public sector employees

Belgrade, June, 22. 2010. (Serbia Today) - The government has yet to pass the decision on paying bonuses to public sector employees, which would probably happen in the fall, Serbian medias reported. There were no talks of the bonuses yet in the government, and it is expected to wait until the budget is rebalanced, which is expected to occur in September. “In the letter of intent with we sent last week to the International Monetary Fund (IMF), we announced that the bonuses would be paid by the end of the year,” sources from the government stated, adding that public sector workers and pensioners will not get the bonuses at the same time. It is not yet known who will receive the bonuses first. Public sector employees with wages of RSD 40,000 (about EUR 400) per month will receive a bonus of RSD 5,000, while pensioners who receive RSD 15,000 a month can expect a bonus of RSD 3,000. Similar bonuses are expected to be paid in early 2011 as well. A budget deficit of about RSD 140bn is expected after the rebalance. “We will discuss the document with officials of the Fund, who will be in Belgrade on August 20, and the new plan for the state budget will include more money for poorer municipalities as well,” the government sources said. About RSD 1bn from the most successful state companies is expected to be paid to 46 of the most poverty-stricken municipalities in Serbia

Jelasic: International context of Serbian currency weakening

Belgrade June 21. 2010. (Serbia Today) - Outgoing NBS Governor Radovan Jelašić says the weakening of the Serbian dinar was the result of events in the international arena. The slide was also influenced by the weakening of domestic currencies in Hungary, Poland and Turkey, he disclosed. “If the dinar depended solely on the situation in Serbia, it should be strengthening to a certain extent because we have signed an agreement with the International Monetary Fund, additional funds have been provided, salaries and pensions are frozen, and prices are stable”, Jelašić opined during the presentation of the latest issue of Kvartalni Monitor (Quarterly Monitor) magazine. “The foreign exchange market is stable, too, so if we look only at the events here, they are positive, but obviously everything that comes from abroad is prevalent at the moment, which is why there was a certain weakening of the dinar in the recent period”, the governor said. “I am convinced that if we manage to continue with implementing the restrictive policy, we should see a somewhat stronger dinar, but things do not depend only on our internal conditions, as the dinar is now largely tailored by external factors”, he said.  The NBS foreign exchange reserves of around EUR 10.7 billion are sufficient to prevent any major fluctuations in the daily exchange rate and provide enough transactions on the interbank foreign exchange market, but the exchange rate will still be determined according to the situation on the market, said Jelašić. After the Thursday NBS intervention of EUR 80mn, the dinar ended its six-day slide against the euro and strengthened by 0.46 percent, so the official exchange rate on Friday was RSD 103.4627 for one euro.
 

Serbian government debt reached 10,5bn E

Belgrade, June, 18. 2010 (Serbia Today) - Serbia's government debt reached EUR 10.54bn at the end of May, which is 31.9 percent of the GDP, the Finance Ministry announced. Serbia's public debt aggregated to EUR 9.85bn at the end of 2009, which means that it was increased by EUR 691mn during the first five months of 2010, the ministry's website said. At the end of April 2010, Serbia's national debt was EUR 10.39bn, which means that during May it augmented for around EUR 150bn. Serbian direct liabilities totaled EUR 9.13bn at the end of May, with the internal and external debt reaching EUR 4.22bn and EUR 4.91bn respectively. The country's contingent liabilities totaled EUR 1.41bn at the end of May 2010. Serbia's government debt amounted to EUR 8.78bn at the end of 2008, which was 25.6 percent of the GDP.

Milosavljevic: Increase in electricity prices would be immoral

Belgrade, June 16. 2010. (Serbia Today) Trade Minister Slobodan Milosavljević said that an increase in electricity prices at this moment would be immoral toward the citizens. He said that at a time when pensions and wages are frozen, it would be wrong to increase electricity prices. Serbian Electric (EPS) announced recently that it would ask the government to approve a price hike in the fall. “My stance is that I will be against an increase in electricity prices until the end of the year if wages and pensions stay froze,” Milosavljević said. EPS General Director Dragomir Marković said on Friday that the company has not backed down from its demand for one more price increase by the end of the year. He said that the conditions for this have already been met, adding that the EPS would ask for prices to be increase by 20 percent.

SNS supports ratification of SAA

Belgrade, June, 15. 2010 (Source: Blic) - The Serbian Progressive Party (SNS) stated that it supports the announcements that the SAA between Serbia and the EU will be unfrozen. SNS official Nikola Selaković said that this act could lead to positive changes for Serbian citizens. He said, however, that the government is still keeping citizens in the dark regarding the entire EU integration process. “SNS is asking the current government, which is presenting EU integration as its greatest success, whether corruption is in accordance with these integrations, as well as the increasing number of unemployed people in Serbia, and the increased number of people using the national soup kitchens,” Selaković said. SNS official Marko Đurić said that everything “the current government has shown in relations with the EU is a charade, because real relations are found in actions, not in rhetoric.” “SNS believes that the current government, other than being socially irresponsible, is slowing down Serbia’s progress towards the EU,” Đurić said. He said that new parliamentary elections are needed in Serbia, adding that the largest parties of the ruling coalition have already started campaigning.

Jelasic: Inflation in June will be less than four percent

Belgrade, Jun 14,. 2010. (Serbia Today)  Outgoing National Bank of Serbia (NBS) Governor Radovan Jelašić  announced that the inflation rate is expected to be less than four percent in June. The figure, according to him, will be about five percent at the end of the year. Jelašić added that prices do not depend only on the dinar exchange rate. The central bank chief told journalists that, apart from the exchange rate, prices depend on many other internal and external factors, adding that it is impossible to precisely determine the dinar exchange rate which may jeopardize the price stability, as "monetary economy is neither physics nor chemistry.” He stressed that Serbia's foreign reserves are high enough for an efficient "defense of the dinar" and added that a certain amount of foreign currency was sold on Monday only for dinars, so that there would be no large daily exchange rate fluctuations. Jelašić recommended that the future NBS governor should, in general, pursue the same policy that he pursued in the last "three plus six years", but added that "it will be up to him to decide on which course to follow.” The new bill on the NBS is before parliament. The debate on the bill is to begin this week, so the new governor is most likely to be elected at the end of June or beginning of July.
 

National bank wants to save the dinar

Belgrade, June 12. 2010. (Serbia Today)  Bank demand for Serbian dinars (RSD) was far greater than that for foreign currency at the 3-monthly foreign exchange swap auctions, said reports. The auctions were organized by the National Bank of Serbia (NBS). “The NBS swap bought EUR 10mn at weighted average swap points of 15,892, while no bank bids for the purchase of foreign currency were accepted”, according to a statement from the central bank. The NBS organizes foreign exchange swap auctions every three months with the aim to boost interbank foreign exchange swap trading and encourage development of the foreign exchange hedging market. 

Dragutinovic: Privatization process continues

Belgrade June 11, 2010 - (Serbia Today) Serbian Finance Minister Diana Dragutinović says the revenues from privatization in 2010 are expected to amount to EUR 1.6 -1.7bn.This figure would include the expected sale of the state's 40-percent stake in telecommunications company Telekom Serbia, which the minister expects will raise no less than EUR 1.5bn. Regardless of the deficit, the budget is solvent, having a sufficient amount of reserves of about EUR 600mn and consequently no problems with deficit financing”, Dragutiović said at recently held summit gathering governors of central banks and finance ministers of Southeastern Europe, held in Montenegro

Saylor: Serbia is not attractive for American companies

Belgrade June 09. 2010 (Serbia Today) - President of the U.S.-Serbia Business Council John Saylor said that “Serbia is not offering anything that would attract American companies and investments. “The U.S. simply is not that interested in this market”, he said. He added that “Serbia is not an economic factor for the U.S., but a political one, if you take into consideration its location, size and Washington’s interests to secure regional stability.” “The current amount of economic and trade relations is very small, though we had important investors in Serbia at one point. Russia is now the main trade partner of the country, and then Germany and the Central European and Balkan countries”, Saylor said. “There are very few people here who know about Serbia or Serbian products,” he said, adding that the Serbian government needs to open new economic headquarters outside of just Chicago and include one in Washington, because that is where the World Bank, International Monetary Fund and many larges businesses are located. Saylor said that Serbia cannot allow “political questions, such as Kosovo, to dominate bilateral relations.” He said that Serbia “in looking for direct foreign investments, must define its most attractive products as a supporting factor for foreigners.” He said that Serbia must also improve its infrastructure, since companies that come to Serbia will not only be selling their products in Serbia. Saylor reminded that U.S. ambassador to Serbia Mary Warlick said that Serbian tourists and businesspeople will be allowed to receive American visas for a ten-year period. “This is excellent, and at the same time, it is not easy to get an American visa. A liberal visa approach would encourage people to come to the U.S. and vice versa, to investigate business possibilities, which would be in the interest of both sides,” Saylor said

Support for Serbian construction industry

Belgrade, June, 08. 2010 (Serbia Today) - The Serbian government recently adopted a program to support the construction industry of Serbia, worth about 30 billion dinars (about 300 million EUR). Serbian Economy Minister Mladjan Dinkic announced  that the program will be implemented over the next  year and a half and that the government and local administrations should provide three billion dinars for the program. According to him, the remaining 80 percent of the funds for the program shall come from loans by commercial banks. Dinkic said that the program will help construction industry by granting the dinar loans with a maturity of five years and one year grace period and annual interest will be the reference interest of the National Bank of Serbia, plus 2.5 percent. "The program was adopted to promote the recovery of the construction Industry of Serbia which since April last year to April 2010th has experienced import declines from 11.3 per cent, "he said

Currency continues sliding

Belgrade June, 07. 2010 (Serbia Today) - Economic experts believes that the Serbian dinar (RSD) will continue to slide during this year and could reach the value of RSD 105-106 per euro, reported Tanjug news agency. Experts also believe that an introduction of the euro as the currency in Serbia would not be received well by the European Central Bank. Serbian president's economic advisor Jurij Bajec said that it is hard to predict further weakening of the dinar, stating that it should not exceed the RSD 105-106 mark. “That is a lot too, considering that inflation will not be greater than six percent by the end of 2010”, he told Radio Television Serbia. Bajec said that the long-term solution for strengthening the dinar would be to improve exports and attract direct investments, adding that exports have increased by 11 percent in Serbia during the first four months of the year. He said that figure is still higher in some neighboring countries, if measured according to exports per capita. When asked how to react to the domestic currency situation, the candidate for the new National Bank of Serbia governor, Dejan Šoškić, said that selling foreign currency from the reserves would only have a short-term effect on stabilizing the dinar. “Long-term stabilization is only possible by increasing the competitiveness of the Serbian industry, increasing exports and attracting foreign investments” Šoškić said. He said that there are two ways to introduce the euro as an official currency – “unilaterally like Montenegro and Kosovo, or by becoming an EU member-state.” Šoškić also said that the ECB would not react well to the former, since Serbia has a high budget deficit, adding that the country would have to decrease spending, prices, wages in the public sector and pensions in order for this to be acceptable, which would not benefit the citizens. Opposition DSS economic expert Nenad Popović commented on the same subject to say that the dinar’s value is a telltale sign of the current situation in the Serbian economy.  He stated that the stability can be defended in the next five to six month with the help of the money from the International Monetary Fund arrangement. However, Popović also noted that Serbia must improve its exports and economy and attract foreign investors in the next year in order to “pump in fresh money” and stabilize the domestic currency.

Serbia gets the new law on electronic communication

Belgrade, June, 07, 2010 (Serbia Today) - The new law on electronic communications will bring a more open market, and better consumer protection, announced the Minister of Telecommunications Jasna Matic. She stressed that in practical terms, the standards that apply in Europe and will also apply to all service providers in the telecommunications and postal services in Serbia. In the future, in the Serbian market, telecommunications services will be able to provide everyone who meets the technical and financial requirements. The license of the state, except in the fixed telephony will no longer be required. For citizens it means better protection, more competition, better service and  probably lower prices. Draft Law on electronic communications should be better to protect service users and will apply to all current and future  telecommunication  operators.  

NIP Minister: Infrastructure program starts in June

Belgrade, June, 04. 2010 (Serbia Today) - An infrastructure development program worth EUR 150mn will start in June, NIP Minister Verica Kalanovic has stated on Tuesday. The resources will be invested in the realization of projects in the area of traffic, education, health and institutions of culture and sports, while concrete projects will be presented during the month of June. Kalanovic told Belgrade daily Večernje Novosti that the program would provide works worth RSD 15 bn for towns and municipalities in the coming period, adding that “taking out loans to invest in infrastructure is always profitable”. The Ministry for the National Investment Plan (NIP) provided EUR 75mn from a European Investment Bank loan, while the rest will be provided by local self-governments and the state, she explained.

According to Serbia's Mining and Energy Minister Petar Škundrić and Albanian Economy, Trade and Energy Minister Dritan Prifti meeting was very success

Belgrade, June, 04. 2010 (Serbia Today) - Serbian and Albanian officials, during their recent meeting in Tirana, discussed improvements to the two countries’ economic cooperation and especially cooperation in the field of energy. Škundrić and Prifti told the media after the meeting that the visit was productive and constructive and that it included friendly talks about the two countries' economic ties. The two ministers also announced that the Memorandum on Economic Cooperation of Serbia and Albania will be signed within the next few months, during Prifti’s visit to Belgrade, and pointed out that the document would be a basis for further cooperation. “Although this is our first meeting, we’ve spoken openly, which points to a need for our countries to intensify cooperation in all areas of the economy, and energy has the most important place in this cooperation,” the Serbian minister pointed out. He emphasized that Serbia and Albania should have a series of joint projects in the field of energy, as well as initiate regional projects, “which are also important for third parties and for Europe as a whole”. “The potential for economic cooperation are ten times what is currently taking place between Serbia and Albania”, Škundrić said, and added that future economic cooperation should also contribute to better cultural ties, friendlier relations between the two countries. He told his Albanian counterpart that Serbia was planning on becoming the region's leader in the field of energy in the next five to seven years, and added that Serbia and Albania should participate in joint gas infrastructure projects. His host said that Škundrić's visit was “historic and productive”. “We’ve talked about how to build cooperation which both countries will benefit from, and we’ve identified in which fields we want to cooperate in the future, such as energy and road infrastructure,” Prifti explained. He said that Serbian investment was welcome in all economic sectors in Albania, that his country was interested in “natural gas interconnections” with Serbia, and that it would “consider the offer”. While in Tirana, Škundrić also met with the country's prime minister, Sali Berisha. A statement after the meeting said that they discussed ways of improving economic cooperation and that the meeting was “constructive, despite the differences the two countries have regarding the important issue of Kosovo.”
 

Ljajic: IMF negotiations involved social policies

Belgrade, June, 02. 2010 (Serbia Today) - The latest negotiations with the IMF were geared towards social policies, said Labor Minister Rasim Ljajić for Belgrde daily Vecernje novosti. He told daily Večernje novosti that almost the entire package of measures agreed on between Serbia and the International Monetary Fund (IMF) could be called “social.” Ljajić said that RSD 6.5bn would be given to those who need it the most.  “It was agreed that we would use RSD 2bn to help workers in the public sector and another RSD 2bn for pensioners…Another billion will be given to the most vulnerable municipalities and another 1.5 billion will be spent on typical social contributions”, Ljajić said.  He said that single mothers will have 20 percent more income thanks to the agreement and that RSD 252mn will be set aside for the work of 69 soup kitchens and for opening 10 more by the end of the year.  “This money will be enough for the national soup kitchens to work without distraction, which is very important to us, because there are 50,000 people who are getting their only meal of the day from these soup kitchens”, Ljajić said.

NIS expects to turn profit

Belgrade, June, 02. 2010 (Serbia Today) – Serbian Oil Industry (NIS) according to the company's General Director Kirill Kravchenko expects that it will turn a profit in 2010 – for the first time in the past several years. Kravchenko told a company monthly that current cost cuts, changes in product assortment, processing and sales structure should play a key role in achieving that goal. “During last year we managed to halt the tendency of loss of growth. From February until December 2009, the NIS net profit was RSD 2.7bn (some EUR 26mn) ”Kravchenko said.  Kravchenko said he regretted the fact that NIS failed to compensate for losses created in the first trimester of 2009 which resulted from the global financial crisis, so that loss was recorded at the end of last year.   

Serbia and the IMF reached an agreement

Belgrade, June, 01. 2010 (Serbia Today) - The Serbian government and the IMF have reached agreement in a talks on the fourth revision of the stand-by arrangement, announced the Minister of Finance Diana Dragutinovic on Thursday. Serbia will now be able to use another tranche in the amount of EUR 380mn, with the loan worth a total of EUR 2.9bn. Finance Minister also noted that the slowing economic growth saw the projected GDP rise from two to 1.5 percent for this year, and from four to three percent for 2011.  The minister also told reporters that public sector salaries and pensions would remain frozen this year, but that those who are paid from the budget would receive bonuses in the second half of 2010.  Dragutinovic announced that tax system reforms would start on January 1, 2011. The visiting IMF mission also discussed the issue of legislation related to fiscal responsibility as they were meeting with Serbian officials. Serbia has so far withdrawn approximately EUR 1.3bn of the IFM loan.
 

End of Serbia and IMF negotiations

Belgrade May 31. 2010. (Serbia Today) - Serbian Prime Minister Mirko Cvetkovic said that the government reached an agreement with the Mission of International Monetary Fund (IMF) in the fourth stage of negotiations about their loan, which is worth 2,9 billion EUR. Serbian Prime Minister did not specify details of the agreement, but he announced that it will be released soon. Reporting about negotiations Belgrade daily Blic announced that Serbia will keep public sector salaries and pensions frozen at the same level this year. Instead of giving those paid from the state budget a raise, the government will make two bonus payments worth RSD 5,000 (some EUR 50) each, in October, and again in December, according to the article. The newspaper writes that this will be the likely outcome of the ongoing negotiations held between Serbian government officials and a visiting IMF delegation. Serbia has a stand-by arrangement worth a total of EUR 2.9bn with this international financial organization. When the IMF and the Serbian government negotiate the next revision of the deal in August, the issue of public sector salaries and pensions will be revisited, writes the daily. Tax system reforms have only been mentioned in passing this time, the article claims, while the subject will be revisited in the summer. This means that there will be no change to the VAT level – “at least not until next year. ”According to the newspaper however, it remains to be seen whether the RSD 5,000 bonuses will be distributed to all public sector employees, or only those with lowest income.