IMF expects no changes in NBS work

Belgrade, March, 30. 2010 (Source: B92) - The International Monetary Fund does not expect any changes in the NBS’s strategy after the resignation of Governor Radovan Jelasic. The IMF representative in Serbia Bogdan Lissovolik said that the arrangement which IMF has with Serbia is in power and that the agreed framework for economic policies is being implemented.
He said that the government's decision of to sell 40 percent of the shares of Telekom Srbija is a good chance for revitalizing the important process of privatization in the country, but added that he did not wish comment on the Telekom case "in this phase". Asked how he sees the government role in controlling the functioning of public companies, Lissovolik said that he could be concluded that the state control in this field is still at a very high level. “It is a fact that a large number of state companies are continuing to produce losses. That is, among other things, a key reason why the participation of the private sector in the total Serbian economy is less than in similar transitional economies such as the ones in Poland and Slovakia.” He said that in these countries, the private sector makes up 75-80 percent of the total economy, while in Serbia, it only carries 60 percent. “Greater participation of the private sector could be a key factor in the Serbian transition towards building a new, sustainable model of growth based on exports,” Lissovolik said.

Government priorities to increase employment, living standards

Belgrade, March 26. 2010 (Serbia Today) - Serbian Prime Minister Mirko Cvetkovic said today that the main priority of the government this year will be to increase employment and living standards.
At the 8th business roundtable meeting with the Serbian government under the title "New policies for economic growth", the Prime Minister announced a series of stimulating measures for stopping the growth of unemployment and to increase economic activity. He stressed that the government will be active in seeking strategic investors from Europe and around the world. Cvetkovic announced the securing of funds for stimulating export-oriented enterprises and strengthening institutional capacity for conquering new markets. The Prime Minister said that the government will work on the identification of sectors that have export potential.Emphasis will be placed on small and medium enterprises (SMEs),he underlined.Also, Cvetkovic announced fiscal incentives that will encourage growth in domestic demand and investment in infrastructure. He added that the government will encourage efficiency of public enterprises and their investments, which will be given government guarantees. Speaking about investment in the energy sector, the Prime Minister said that out of €1.6 billion foreseen for this purpose, power industry Elektroprivreda Srbije (EPS) and forest management company Srbijasume will receive €700 million, which amounts to 5% of GDP. The Prime Minister announced special incentives for the building sector, adding that the fiscal stimulus will be €20 million, which should instigate housing construction worth €300 million.
Cvetkovic said that we should expect reforms in the judiciary, pension and disability insurance sector, as well as in education. Along with the economic policy, a plan of social security for citizens will be implemented, he announced, noting that systemic laws on social protection and better identification of vulnerable groups will be adopted. All measures will be balanced and will not affect macroeconomic stability, said Cvetkovic. When it comes to the sale of Telekom Srbija, he stressed that the government considered which percentage of this company should be sold to attract more than one interested party and therefore has decided to sell 40% of the shares. He said that the buyer of 40% of Telekom’s shares will become the majority owner, because the shares will be distributed to citizens and will be available for trading, so the future owner of 40% of the shares would be able to become the majority owner. Cvetkovic said that the sale of Telekom will be similar to Mobtel’s sale. The Prime Minister stressed that the money from the sale of Telekom will go to a special fund for investments. Namely, the funds will be used to build roads such as road Belgrade–Cacak, Cacak–Pojate–Krusevac, Paracin–Vrska Cuka, Nis–Prokuplje and others, the Prime Minister said. Cvetkovic said that the Serbian government is committed to regional cooperation and better relations in the region, and pointed out that there are some problems in the Balkans, but that they can be dealt with through talks. He stressed that the official position of Belgrade is to preserve the territorial integrity of Serbia and added that the decision of the International Court of Justice (ICJ) will create the basis for new talks, which should lead to a mutually acceptable solution to the issue of Kosovo-Metohija.

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.