International Information Centre for Balkan Studies

IMF fails to get government to hike price of electricity

Finance Minister Sinisa Mala confirmed on Tuesday that the issue of increasing the price of electricity in Serbia has been discussed with IMF representatives.

May 21, 2019

However, he told a joint news conference in Belgrade, no agreement has been reached.

According to him, the views of the government of Serbia and the IMF differ in this regard, both when it comes to justifying the move, and the amount of the possible price hike.

"I don't want to come out with more details since we did not reach any agreement," Mali said.

IMF delegation head Jan Kess Martijn was asked if the amount was five percent, and whether the price should have been increased during the summer. He said that the IMF spoke with government representatives about the price of electricity and that this is an important issue in Serbia and in other countries.

Martijn said that the price must be such as to provide enough room for system maintenance and investments, and that there is also the social aspect.

He said that "a good balance" should be found there.

"We have not achieved, up until this moment, a clear conclusion," Martijn said.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=21&nav_id=106878

Wages could grow further, president says after IMF meeting

Serbian President Aleksandar Vucic on Monday in Belgrade met with an IMF delegation led by mMission head Jan Kess Martijn.

May 20, 2019

On this occasion, representatives of the international institution confirmed a stable GDP growth projection of 3.5 percent for 2019 and four percent for 2020.

Vucic stressed that despite slower growth in EU member-states and global challenges, Serbia's goal was to exceed the projected growth rates.

A topic of particular interests for Serbia's citizens were wages and pensions, and the meeting confirmed that the country's responsible policy and stable economic growth allow for their further increase.

Significant attention was devoted to more efficient governance and better implementation of investments at public enterprises, the presidential press office said in a statement.

Vucic and the IMF delegation also discussed enterprises of general interest, including public companies such as EPS and Resavica, privatisation of Komercijalna Banka and Petrohemija, as well as a tax administration reform.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=20&nav_id=106869

"GDP per capita to reach USD 10,400 in 2023"

The standard of living of Serbian citizens will be increasingly higher, according to Finance Minister Sinisa Mali.

May 20, 2019

This is true because according to the IMF and World Bank projection our country will this year have GDP growth of at least 3.5 percent.

Meanwhile, GDP per capita, which was around USD 7,200 in 2018, will be around USD 10,400 in 2023 - a 44 percent increase, the minister said.

"The biggest task for the state is to provide an attractive market. After the achieved fiscal consolidation and further maintenance of the macroeconomic stability, the key priorities will be three: increase of salaries and pensions, i.e., personal consumption, even more capital investments, and continue to reduce the tax burden on salaries," Mali said.

He also said that the investments reached record levels this year as the budget allocated more than RSD 220 billion, and added that more than 250 billion will be planned next year.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=20&nav_id=106866

Corridor 10's southern arm completed in Serbia

The southern arm of Corridor 10 on the route through Grdelica Ggorge was officially opened on Saturday.

May 20, 2019

The ceremony was attended by Prime Minister Ana Brnabic, President Aleksandar Vucic, members of the Serbian government, and Chairman of the Bosnia-Herzegovina Presidency Milorad Dodik.

The section through the Grdelica Gorge is 26.3 kilometers long and was the most demanding section on Corridor 10. It was completed after six years of struggle with nature, the construction of 36 bridges and the two longest tunnels, the Serbian government has announced.

Brnabic said, speaking at the Predejane Loop, that she was "infinitely happy and proud of this venture."

"Congratulations to all citizens of Serbia because this is for all citizens, this is a great, historic day. And symbolically, the day when we connect with the corridor with Europe, where our place is, she said noting that this day that should serve as a turning point for our country and people to finish things, to finish our projects, not to give up when it is the hardest," the prime minister said.

Vucic pointed out that this route of Corridor 10 shows that "we can overcome all the difficulties."

"This will be an opportunity for good transit traffic, but also for citizens to get to know their country - Vlasina Lake has never been closer. This highway is a symbol for how we can overcome obstacles," the president said.

He congratulated on the enormous success of all those who participated in the project, pointing out that the highway is not only important because of the beauty, but also for the investors who will come, both foreign and domestic, for saving money and lower transportation costs.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=20&nav_id=106862

There's still chance Volkswagen could come to Serbia - PM

Serbia still has a chance to become the destination for Volkswagen's new factory, and we will continue to fight for that, Prime Minister Ana Brnabic has said.

May 17, 2019             

"Serbia is fighting. I understand that there are people in Serbia who would be infinitely happy if Volkswagen didn't come. There are, fortunately, many, many more people who will be infinitely happy if it does," the prime minister said.

"There are also many people who are happy today because Serbia, as the only state that is not yet a member of the European Union, is in the final race for Volkswagen," she told TV Pink.

According to her, this would have been "completely impossible" five years ago.

"By the very fact you are not an EU member, such companies did not think about you. Where we are today is in the final race for Volkswagen competing with big markets, huge countries like Turkey, EU members like Bulgaria. That little Serbia is in that game is yet another confirmation of how much Serbia is worth today, how much it is respected and how much perception and business conditions have improved," Brnabic said.

She pointed out that the government will do its best and that bringing Volkswagen to Serbia is something that is being worked on jointly.

"We will not give up until the last moment, we will do our best and run this race to the finish," said Brnabic.


IMF praises Serbia for attracting foreign investments

Prime Minister Ana Brnabic has with a delegation of the International Monetary Fund (IMF) led by Head of Mission Jan Kees Martijn.

May 17, 2019

They discussed the implementation and effects of the current advisory program that Serbia has with this financial organization, the government announced.

The officials discussed the main points of the current program – the reform of the Tax Administration, the salary reform, the continuation of the reform of public enterprises, the adoption of fiscal rules that include the formula for indexing pensions and the continuation of the implementation of structural reforms.

The prime minister informed the head of the IMF mission that the GDP growth projection for this year remains 3.5%, and specified that the biggest growth in the first months of this year is the construction sector, which is even more than 13% in relation to the same period last year.

Brnabic stressed that the value of the new investment cycle for infrastructure projects in Serbia will be more than EUR 8 billion.

Martijn praised excellent results on foreign direct investment, which in the first four months amounted to EUR 1.2 billion, a better result than last year.

He pointed out that it is necessary to create more fiscal space for greater investment of the domestic economic sector, which would significantly increase GDP growth and strengthen the private sector.

The officials concluded that it is necessary to work more on preventing the outflow of professional staff from Serbia, which, according to the head of the IMF Mission, is a common problem for all countries in the region.

Brnabic announced that, as part of the strategy of returning our people living and working abroad, the Agency for Circular Migration will be established, which should provide them with all the necessary support on this issue.

The Serbian government is intensively working to prevent corruption at all levels, she explained, adding that the anti-corruption law is currently in parliamentary procedure.

According to Brnabic, due to efficient eGovernment, the possibility of corruption has been significantly reduced and greater transparency of the state apparatus has been made possible.

The prime minister stressed that the state placed a special emphasis on preventing the gray economy, referring to the new application eInspector, which began operations earlier this year, which will enable networking of all inspections and better monitoring of the work of inspectors.

She announced that from September this year the implementation of a unique educational number will start, which should enable students to follow during school, but also the efficiency and operation of educational institutions.

Also, students and their parents will, thanks to information in one place, be able to learn everything about the desired educational institution, employment opportunities and how much salary can be expected for certain educational profiles, the Prime Minister explained.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=17&nav_id=106857

NCR starts building technology campus in New Belgrade

NCR on Tuesday officially started building its state-of-the-art technology campus in New Belgrade.

May 14, 2019

The groundbreaking ceremony in the municipality's Block 42 was attended by President Aleksandar Vucic.

The US company will invest about USD 90 million in this project. The campus will occupy an area of about 30,000 square meters and will have two underground floors for parking, a ground floor with retail and catering facilities and seven more floors of office space.

Besides Vucic, NCR Corporation President and CEO Michael Hayford also took part in the ceremony.

The Serbian president said that he was "pleased that this campus will be bigger than the one in Atlanta."

"We bring smiles not only to the 3,135 people hired so far and to the 1,000 who will be hired at the campus," Vucic said, and added that Serbia backed the project with EUR 14 million.

The president also said that this investment shows that relations between Serbia and the US can be "incomparably better."

Hayford also spoke to say that NCR is investing in Serbia because of the good investment climate and the excellent workforce.

He said that NCR had more employees in Serbia than anywhere in the world, including its home campus in Atlanta, and that Serbian employees have "energy, commitment and an excellent work ethic."


15 state-owned companies to be sold by end of year

Tenders to privatize 15 out of 85 companies in the competence of the Serbian Ministry of Economy can be expected by the end of the year.

May 9, 2019

Dragan Stevanovic, state secretary at the ministry, told this to Tanjug on Thursday.

Tenders for MSK Kikinda, HIP Petrohemija, JAT Tehnika and JAT Apartmani are the most likely to happen, but tenders for Krusik Plastika and around a dozen other enterprises are also possible and some of the companies might get new owners in 2019, he said.

"Launching tenders for a part of the remaining 70 companies this year is not impossible either," Stevanovic said, adding that this group of companies also included spas.

There are also between 30 and 40 companies in Kosovo and Metohija - and their privatization is "neither realistic nor possible at this moment," Stefanovic said.

He expressed satisfaction with privatization in Serbia, in particular in 2018 - the year that saw the completion of the privatization of the mining and smelting complex RTB Bor and the agricultural company PKB, perhaps the biggest challenges in the process.

Stefanovic explained that the state initially received 350 and 120 million dollars respectively for these companies, "while investments will follow."

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=09&nav_id=106801

Central bank once again keeps key policy rate unchanged

The Executive Board of the National Bank of Serbia (NBS) on Wednesday voted to keep the key policy rate at 3.0%.

May 9, 2019

In making the decision, the Executive Board was guided primarily by the outlook for inflation and its factors in the domestic and international environment, the bank said in a press release, and added:

"Inflation has been moving in line with the Executive Board’s expectations – it has been low and stable for the sixth year in a row, measuring 2.8% y-o-y in March. Its temporary approach to the target midpoint in March is judged to be due primarily to the low base for vegetable prices and the fact that they rose more than seasonally usual for this period of the year. Core inflation stayed unchanged from the previous month, equalling 1.3% y-o-y in March. Low inflationary pressures are also indicated by the inflation expectations of the financial and corporate sectors anchored around the 3% target for both one and two years ahead. The Executive Board expects inflation to remain stable within the target tolerance band (3.0±1.5%) in the coming period."

The Board said that caution in monetary policy conduct is still warranted, chiefly because of persistent uncertainty in the international environment, but pointed out that the resilience of our economy to potential adverse effects from the international environment has increased owing to reduced internal and external imbalances and a favorable macroeconomic outlook.

"As in the previous two years, public finances recorded a surplus early this year and the current account deficit was fully covered by the net inflow of foreign direct investment. The Executive Board expects that economic growth this year will be led by domestic demand, i.e. investment and consumption, and that foreign direct investment, which supports the expansion of our production and export capacities, will lead to the gradual narrowing of external imbalances in the medium term," the central bank said.

The next rate-setting meeting will be held on June 6.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=09&nav_id=106800

Serbia's public debt now at 50.9 percent of GDP

Serbia's public debt at the end of March amounted to 23.4 billion euros, which is 50.9 percent of the planned annual GDP.

May 6, 2019

The Finance Ministry announced this on Monday.

At the end of February, the public debt was 23.15 billion euros, or 50.4% of GDP.

At the end of 2018, the figure amounted to 23.01 billion euros, which was 53.8 percent of GDP, and at the end of 2017 it was 23.22 billion euros, or 57.9 percent of GDP.

The lowest number was reached in 2008, when it amounted to 8.78 billion euros or 28.3 percent of GDP, while at the end of 2000 it amounted to 14.17 billion euros, which was 201.2 percent of GDP.

According to the Law on the Budget System, the share of public debt in GDP is limited to 45 percent.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=06&nav_id=106768

Minister: IMF thinks Serbia achieved "incredible result"

The IMF and the World Bank have assessed that Serbia has achieved an incredible result by reducing its public debt.

May 1, 2019

The figure used to be over 70 percent of GDP, and is now at 50 percent with a tendency of further decline, says Finance Minister Sinisa Mali.

Speaking for Tanjug, he recalled under the Maastricht criteria, the public debt should not exceed 60 percent of GDP.

Mali said that only a few years back, in 2014, Serbia's public debt was mover 70 percent of GDP, to be at 50.8 percent at the end of March this year.

"We accomplished that during the time of financial consolidation. Recently I had an opportunity to speak about this at the London Stock Exchange, where 300 of the largest investors in central and eastern Europe heard the results of our reform. They were impressed by how we managed to achieve growth in spite of the consolidation and a reduction of salaries and pensions," Mali said

The minister stressed that reducing the public debt is a part of a responsible economic policy aimed at "not leaving costly loans and high indebtedness of the country to our children."

He added that, in contrast, the previous authorities left the country on the brink of bankruptcy.

The IMF and the World Bank also predict that Serbia will be the carrier of economic growth in the region, with a cumulative growth that will at the end of 2023 be 21.1 percent higher than in 2018.

According to the forecasts of international financial institutions, the Serbian economy will in the next five-year period grow by four percent a year on average - with none of the countries it borders having higher cumulative growth.

The IMF predicts GDP per capita in 2023 to reach USD 10,394 - an increase of 44 percent from USD 7,207 in 2018.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=01&nav_id=106740   

"Balkan Exodus": Six million people have left region

EBRD analyses show that during migrations, highly qualified personnel rather than those with average knowledge and skills leave regional countries.

May 2, 2019

European Bank for Reconstruction and Development (EBRD) President Suma Chakrabarti told RTS that migration of skilled workers has a negative effect on productivity, and that negative growth effects can also lead to the departure of low-skilled labor.

(Phito: Vaicheslav/Depositphotos)

"Emigration, especially of young trained personnel, is a serious problem for the Western Balkans. Migrations are motivated by income disparities in comparison with (other) European countries, which is the main target region. But migrations are also affected by dissatisfaction with domestic political and economic opportunities," said Chakrabarti.

He cited assessments that show nearly six million people from this region currently living abroad, which represents a third of the Western Balkans population.

"Regardless of the fact that these people send a significant amount of remittances home (in Serbia, the inflow from remittances last year amounted to 2.6 billion euros) - their talents are used by other countries, and remittances do not have a significant effect on development. They also limit the readiness of whose who stayed at home to work," he added.

As Chakrabarti said, "solving the problem of migration is very complex."

"It's not just about raising the level of income, which is a difficult issue in itself, but also about creating better living conditions at the local and national level. This implies better functioning of public institutions, which should serve people instead of complicating their lives, providing high quality health care and education, as well as a judicial system in which judicial proceedings will be fair and will not last for years," he said.

"It also implies access to quality water supply, but also wastewater treatment services, as well as good air quality. This should be a priority for economic policy makers, just as the better roads and railroads are," Chakrabarti concluded.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=05&dd=02&nav_id=106748    

"Stable economic climate encourages investors"

Prime Minister Ana Brnabic spoke on Wednesday in Belgade with President of the European Bank for Reconstruction and Development (EBRD) Suma Chakrabarti.

April 17, 2019

They discussed "cooperation to date and plans for the future projects of the EBRD in the Republic of Serbia," the government has announced.

Brnabic informed Chakrabarti about the progress of the reform process, especially in the field of the economy and education, and underlined that cooperation with the EBRD is significant for the further development of the Serbian economy.

She said that even stronger development of the IT sector remains to be the priority goal in the coming period, as well as greater investments in the development of small and medium-sized enterprises in which the support of the EBRD would be very significant.

Chakrabarti expressed satisfaction with the reforms implemented, especially in the field of the economy, and assessed that progress has been made, and that a stable economic climate is a good incentive for new investments in Serbia.

The meeting also looked at future EBRD projects in the area of infrastructure and energy.

The two officials highlighted the importance of the realization of the project for construction of a waste treatment plant in Vinca.

Source: https://www.b92.net/eng/news/business.php?yyyy=2019&mm=04&dd=17&nav_id=106648

Work permit procedure for foreigners to be simplified

The Serbian government on Thursday adopted the Bill on Changes and Amendments to the Law on Employment of Foreigners.

 April 5, 2019

The proposed amendments will simplify the procedure of issuing work permits to foreigners, with the aim of creating a more favorable business environment and further attracting foreign investments as one of the priorities of the government.

By introducing the possibility of issuing a work permit to a foreigner based on an approved visa for longer residence based on employment, the conditions for more efficient work of the National Employment Service are created, the final effect of which is the acceleration of the procedure for obtaining a work permit and the possibility for foreign nationals to start with business activities, the government announced.

At the session, the decision was made to establish the Academy of Education and Medical Vocational Studies.

Athlete Damir Mikec was awarded a cash prize of EUR 15,000 in dinar counter value for the silver medal at the European Championships in Olympic sports discipline shooting, which was held in Osijek in March this year.

The same amount was awarded to his coach Goran Mikec for winning the silver medal at this competition.

For the bronze medal won at the European Championship in Olympic sports discipline athletics, held in Osijek, athlete Zorana Arunovic and her coach Goran Mikec were awarded a cash prize of EUR 10.000 each in dinar counter value.

Government members adopted today the National Program for the Suppression of the Gray Economy with the Action Plan for its implementation for the period 2019-2020.

Adoption of the revised text of the National Program is necessary in order to apply the activities and measures to combat the gray economy as soon as possible, in order to preserve fiscal stability and improve business environment.

At today's session, the Action Plan for the period 2019-2020 was adopted for the implementation of the Strategy for Development of Internal Financial Control in the Public Sector in the Republic of Serbia for the period 2017-2020.

The government adopted the Conclusion on the adoption of the Action Plan for Negotiating Chapter 22- Regional Policy and Coordination of Structural Instruments in the Accession Negotiations of the Republic of Serbia with the European Union.

Source: https://www.b92.net/eng/news/politics.php?yyyy=2019&mm=04&dd=05&nav_id=106560             

Work on regional connectivity continues - PM

Prime Minister Ana Brnabic spoke on Thursday in Belgrade at the opening of the Second Digital Summit of the Western Balkans.

April 4, 2019

Brnabic said that her government has set digitization and education as their absolute priorities in order to take advantage of all the chances that are being offered to us today.

"The digital summit is important for several reasons: political, social and economic. Today, we send a message to the world to the world that, despite all the challenges and misunderstandings, we continue to work on regional networking, regional cooperation, implementation of previously agreed agreements and commitments, and opening new perspectives," Brnabic said, according to her remarks published by the government.

"The political moment is certainly not the best for a regional summit, and even less for the signing of new regional agreements. But the future of the region, the future of young people living in this region depends on the fact that in such difficult and complex situations, we bring primarily a political decision that we will continue to build the stability of the region, and not further collapse," she said.

"That we will do our best to show our partners abroad that we are a stable and predictable partner, and to our citizens, that we are serious and responsible. To young people, that this region has a different, better perspective. To give them a signal that we are more responsible and that they should stay here and not look for our future somewhere else," the prime minister said, adding that one of the things that will mark this Summit is the signing the Regional Roaming Agreement.

"This was a difficult decision for us at a time when Pristina is imposing, for over four months now, 100 percent taxes on products from central Serbia and Bosnia-Herzegovina, which are measures that do not correspond to the time in which we live and the spirit of cooperation that we are trying to promote, together with our partners, primarily from the EU, and which also represent a direct violation of the CEFTA agreement, which is the basis of all further regional relations and cooperation," Brnabic said.

According to her, egional Roaming Agreement is not just a document that defines how telecom operators will behave in the region, but also, from Serbia's point of view, "shows the map of the road that we need to follow: more cooperation and more agreement, more mutual understanding in the interests of all citizens living in this region."

"Economically, this summit is important to show that our region follows the time and trends we live in. To understand very well, we not only live in a time that dictates and defines digital technologies and digital literacy, but rather that we live in the time of another, 4th Industrial Revolution, in which the entire Western Balkans has the opportunity, if we are smart, to be reasonable and dedicated, we compensate for the missed and change our destiny," Brnabic said, adding that she was pleased that the Digital Summit of the Western Balkans gathered more than 4,000 accredited persons and 200 speakers in three stages this year, "and that this room is too small today for all who wanted to come."

She also thanked "our partners from the EU, and especially the people from the European Commission, above all Commissioner Mariya Gabriel and her team, on the effort, work, support and understanding."

Source: https://www.b92.net/eng/news/politics.php?yyyy=2019&mm=04&dd=04&nav_id=106557

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