160 million Euros loans for budget deficit

Belgrade, April 24, 2010 (Serbia Today) - Finance Minister Diana Dragutinović signed loan contracts with three commercial banks on Wednesday. The loans worth EUR 160mn will be used to finance the budget deficit, a Ministry of Finance statement said. Marfin Bank, Erste Bank and Vojvodjanska Bank granted Serbia loans worth EUR 100mn, EUR 40mn and EUR 20mn respectively. The repayment period is five years, and the payments will be made in 48 equal installments, with a one-year grace period, the statement reads. It is further added that the interest rates approved by the banks are the most favorable ones that the state can get in the market for the time being. The granted interest rates are monthly euribor +4.5% fixed interest rate at Erste Bank, and monthly euribor +4.35% fixed interest rate at Marfin Bank a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad. The signing of the contracts was in keeping with the Budget Law for 2010. The contracts were signed on the basis of the Law on the indebtedness of the Republic of Serbia at Erste GCIB Finance I.B.V. Amsterdam, with Erste Bank a.d. Novi Sad as agent, Marfin Bank a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad.

“Role of NBS council won’t change”

Belgrade, April 23. 2010 (Source: B92) - NBS Council President Dejan Šoškić said that there would not be changes made to the level of the council’s authority. Šoškić, who is candidate for the position of NBS governor, spoke in Belgrade on Tuesday to say that there were “many different solutions for the new NBS law,” but that officials are no longer considering changing the role of the council by giving it more powers. This means that there would not be any authorities taken from the Monetary Committee and given to another body of the central bank that has more members, Šoškić said. He added that the central bank and government officials should be allowed to adopt the new law for the National Bank of Serbia first. Asked when he is expected to be officially elected as the new NBS governor, Šoškić said that the amendments for the NBS law must be drafted first, adding that it was hard to tell when this would be completed. Šoškić also commented on the introducing of measures which enable the citizens to obtain loans from commercial banks under more favorable conditions as “justified”. During an break in the International Accounting Standards (IAC) seminar, Šoškić said that the current market demand in Serbia has dropped compared to the previous period, and that this situation has opened possibilities for implementing instruments such as loans which allow a somewhat greater level of indebtedness and simplify the procedure for obtaining loans. “This measure is justified if there is no imminent danger of inflation in the next period, but if the situation should change - and there are signs already that the deflation will not last long - then every measure should be closely inspected”, Šoškić said. Šoškić reminded that monetary policy has for some time now been subject to relaxing, and that the NBS has decided on several occasions to reduce either the referent interest rate or the mandatory state reserves, and added that such policy is likely to persist, since there is no magic formula which the state could use. The instruments which can be used are quite clear, and so are the expectations from monetary policy - stability of prices and improvement of Serbia's economic growth, Šoškić pointed out.

The Employment Fair opened

Belgrade, April 22. 2010 (Serbia Today) - Mladjan Dinkic, the Vice-president of the Serbian Government and Minister of Economy, opened the Employment Fair “Career Days” at Sava Center on Tuesday. In his speech he mentioned that the 2010 is one of the most difficult year to get a job. The Serbian Government will try to make a connection between the employers and job seekers, and that the Fairs like this is the great opportunity for that. He also added that the young and ambitious people will have the chance to get good jobs with high salaries. “There are a lot of young people who are looking for a job, but they need to fight and not give up. One has to seek work and be persistant and not to wait for others to offer it. “ –said the Minister. At the Employment Fair the jobs are offered by 40 companies , among which are “Vip Mobile”, “Ernest and Young”, The National Bank of Serbia, “Apatin Brewery”, and the “Coca-Cola”.

Reform of tax system to boost production, employment

Belgrade, 22 April 2010 (Serbia Today) - Minister of Finance Diana Dragutinovic said yesterday that the announced reform of Serbia’s tax system will boost production, employment and exports through a reduction in income taxes and contributions and an increase in excise. Speaking at the 11th session of the Assembly of the Serbian Chamber of Commerce, dealing with basic elements of the tax reform, Dragutinovic said that the excise on cigarettes and alcohol should be increased. This would be done by establishing the excise on alcoholic drinks by the content of alcohol, and not per liter. There is room for increasing the excise on cigarettes after the state’s obligations to investors in the tobacco industry cease. She stressed that the tax reform must have no impact on revenues, meaning that along with reduction of income taxes and contributions, the state must find additional sources of income so that budgetary deficit does not grow. The Minister explained that the VAT rate in Serbia is perhaps the lowest in Europe because there are two rates, of 18 and eight percent. The share of goods that are taxed with the lower rate is 40%, which means that the real VAT rate is 14%. Dragutinovic stressed that the grey economy contributes to over 30% of GDP, just as in other eastern European countries. By simply transferring the grey economy into legal channels, which is what representatives from the economic sector propose, we would not be able to close the budgetary deficit in the event of income tax being lowered, the Minister said. She said that the grey economy is the largest sector when it comes to employment, but the smallest in the VAT system, where taxes are the hardest to evade. She also said that the tax reform should strive to reduce tax in sectors where evasion is the highest, and increase it in others where it is not that frequent. Dragutinovic explained that such a tax system would stimulate exports because it would reduce labor costs and increase the competitiveness of the Serbian economy, at the same time discouraging imports and in this way improving Serbia’s balance of payments. The Minister stressed that the tax reform could also help to shift from one economic growth model to another, adding however that this is also influenced by the competitiveness of the workforce, the reduction in administrative obstacles and an efficient judiciary. She said that the Ministry of Finance is also working on a reform of public expenses and before the end of the year it will adopt a law on fiscal responsibility to limit the state’s expenses.

FIAT will produce 200,000 cars in Serbia

Belgrade, April 21. 2010 (Serbia Today) - “Fiat” plans that by year 2015 they will be produce 200,000 cars in Serbia, said the Roman daily "Republic", referring to the company's strategic plan, which will officially be released today. According to the internal document which has come to the Roman daily, "FIAT” predicts drop in production in Poland and the sharp increase in Serbia, where it plans the production of 200,000 low-cost cars." In terms of total production,” Fiat” plans to produce five million cars by 2015 that is. between 2.5 and 2.7 million Fiat vehicles and another 2.8 million “Chrysler” vehicles. From that point, just over one million “Fiat”, “Lancia” and “Alfa Romeo” vehicles will be produced in Italy. Other seven models starting with Fiat 500 will be produced In the United.

Smaller Export Deficit with Holland

Belgrade, April 20, 2010 (Serbia Today) - The total value of the export by Serbian companies to Holland during last was 156 million US dollars which is 13% less than a year before, according to a Serbian Chamber of Commerce report. At the same time, Serbian import from Holland was 235 mill. US dollars. The most important Serbian import products are transportation equipment (37,74%), iron and steel (11,20%), fruits and vegetables (8,69%), wheat (7,05%), and garments (6,65%). The most dominant import products from Holland were cars and other vehicles (6,5%) as well as industrial ,medical and pharmaceutical equipment and machines. Although the Serbian export deficit last year was 78 million US dollars, it was still smaller than the year before. This is not only because of the growth of Serbian export to Holland, but primarily because of the less import from Holland at the same time period. The biggest Serbian exporters to Holland are "Brodogradilište Begej" from Zrenjanin, whose export account for over 15% of the total Serbian export to Holland. Other exporters are "Team" Sremska Mitrovica, "US Steel" Smederevo, "Rhine-Danube" Kladovo, "Impol Seval" Sevojno, "Mateksom " Subotica, "Agroglob" Novi Sad, "Delta agrar" Beograd, "Prvi maj" Pirot, "Agrotrejding" Novi Sad and "Interprom" Beograd.

Value Added Tax (VAT) Remains 18 Percent

Belgrade, April 18. 2010 (Serbia Today) - Mladjan Dinkic, Serbian Deputy Prime Minister and Minister of Economy said that the Government is thinking about changing tax policy, but that the rate of value added tax (VAT) of 18 percent will certainly not increase, reports Beta. Dinkic said that he supports the idea of the Ministry of Finance on tax reform and said that it would be best to start with the application on January 1st 2011th. We can think about reducing the income tax to 10 percent, with an increase of minimum taxable wages, while also establishing a uniform VAT rate of 18 percent, but with the abolition of taxation of the most sensitive products, like bread, books, newspapers and some other products - said Dinkic