International Information Centre for Balkan Studies

NBS: Serbia’s gross foreign currency reserves €12.79 billion

May 14, 2020

Serbia’s gross foreign currency reserves stood on 12.79 billion Euro in April, 321.7 million lower, the National Bank (NBS) said in a statement on Thursday, the Beta news agency reported.

Net reserves at the end of April were 10.67 billion Euro and were 457.2 million higher y/y.

Net foreign currency income in April in several categories was “more than sufficient” to cover the net foreign currency outflow.

The national Dinar currency weakens 0.1 percent nominally, and its value to Euro has been almost unchanged since the beginning of this year.

NBS said it sold net 440 million Euro at the inter-banking currency market in April. Since the beginning of the year, it sold a total of 625 million Euro.

Source:  http://rs.n1info.com/English/NEWS/a599556/Serbia-s-foreign-currency-reserves-12.79-billion-Euro-in-April.html

Government considering ways to aid Air Serbia, minister says

May 14, 2020

Serbian Traffic Minister Zorana Mihajlovic told Belgrade daily Politika that the government is considering the possibility of increasing its share in Air Serbia as a form of aid to the national air carrier.

Everything that can help the development of Air Serbia is being considered, she said, adding that four models are being considered to help the airline pay its debts and cover losses and maintenance costs as well as proposals for aid secured by company owners.

The Serbian government has a 51 share of the airline with the rest held by Etihad.  

The minister said that the government will continue aiding Air Serbia in line with the best practices in the European Union.

Source:  http://rs.n1info.com/English/NEWS/a599331/Government-considering-ways-to-aid-Air-Serbia-minister-says.html

More than two million apply for government one-time aid

May 14, 2020

More than two million people applied for the 100 Euro promised by the Serbian authorities to the entire adult population as aid during the coronavirus pandemic in the first few hours, Finance Minister Sinisa Mali told the Serbian state TV (RTS).

The minister said that 2,350,000 people applied for the aid on the first day, adding that payment will start this Friday to pensioners and people on social security who do not have to apply. The payments will continue every five days until completed, he said.  

Serbian President Aleksandar Vucic announced the measure in a live appearance on a pro-government TV station during the state of emergency, promising the payment of 100 Euro to every adult citizen of Serbia who applies for it with the exception of pensioners and people on social security. The opposition has criticized the measure as populist and costly to the country’s finances.  

Source:  http://rs.n1info.com/English/NEWS/a599311/More-than-two-million-apply-for-government-one-time-aid.html

Serbian trade minister says 18.5 million Euro of goods exported to Kosovo

May 14, 2020

Serbian Trade minister Rasim Ljajic told TV Pink on Thursday that Serbian companies exported 18.5 million Euro worth of goods to Kosovo during the coronavirus pandemic state of emergency.

He said that some of those exports were higher than before the pandemic because Kosovo depends on Serbia for some raw materials. According to the minister, 83 percent of all grains sold in Kosovo originate in Serbia proper. He said that the Kosovo authorities are restoring trade barriers by introducing a tax of 40 Euro a ton on flour.  

Ljajic said that the Serbian trade sector did well because of the high demand for foodstuffs but added that a drop in the sale of household appliances and furniture was recorded. He said that the exports of grains to the countries of the region and the rest of Europe rose during the pandemic and that imports of oil and medical supplies rose. He said that all prices that had been frozen during the state of emergency were now free with the exception of surgical gloves and masks.

Source:  http://rs.n1info.com/English/NEWS/a599317/Serbian-trade-minister-says-18.5-million-Euro-of-goods-exported-to-Kosovo.html

EBRD says Serbia to see 3.5 pct drop in GDP this year

May 13, 2020

The European Bank for Reconstruction and Development (EBRD) said in its latest Regional Economic Prospects report that Serbia’s GDP will drop by 3.5 percent in 2020 and recover at a rate of 6 percent in 2021.

“In light of the Covid-19 crisis, GDP is expected to fall by 3.5 per cent in 2020, recovering in 2021 by 6.0 per cent,” the report said, recalling that Serbia has raised the level of its integration into global supply chains, mainly with the Eurozone countries in recent years and that several large manufacturers were forced to shut down temporarily because the pandemic has disrupted international trade.

The report said that the coronavirus pandemic has prompted S&P to revise the outlook on Serbia's long-term credit rating from positive to stable in early May 2020.

The report said that Serbia’s GDP grew by 4.2 per cent in 2019, compared to 4.4 percent in 2018, despite poor industrial performance in the first half of the year with economic activity picking up in the second half of the year along with strong fiscal performance.

“The 2019 budget recorded a small deficit of 0.2 percent of the GDP, while public debt stood at 53 per cent of GDP at the end of 2019. It added that Inflationary pressures remain subdued and, after three cuts of 25 basis points each in 2019, the central bank lowered the key policy rate by another 75 basis points in total in March and April 2020, to 1.5 per cent. The latest cuts sought to mitigate the economic effects of the pandemic, the EBRD report said.

Source:  http://rs.n1info.com/English/NEWS/a599065/EBRD-says-Serbia-to-see-3.5-pct-drop-in-GDP-this-year.html

Serbian central bank says inflationary pressure low

May 13, 2020

The National Bank of Serbia (NBS) said in its monthly report on Wednesday that inflationary pressure remains low with the market fully supplied in coronavirus pandemic conditions.

According to the press release, inflation has been within expectations since the start of the year and stood at 0.6 percent y.o.y. in April with core inflation at 1.4 percent.  

“Thanks to the fact that monetary and fiscal measures were introduced on time, minimal damage was inflicted on production capacities and jobs in 2020, while next year Serbia will post robust economic growth, which will not only mean full recovery, but it will also make up for what we missed out on in terms of economic activity during this year. This is the best proof of the importance of everything we did in the previous two months, as well as in the previous eight years to stabilise and strengthen our economy, since this enabled us to provide appropriate support to both citizens and the economy. In accordance with our expectations, the IMF also estimated that Serbia will be one of the few countries whose economic activity in 2021 will exceed the pre-crisis level”, NBS Governor Jorgovanka Tabaković is quoted as saying.

She said that growth would have been higher than four percent this year without the pandemic and added that like most other European countries Serbia will feel the full effect of the crisis in the second quarter, in April and later and recovery over the next few months. “We feel that the speed of economic recovery will be largely dictated by Serbia’s strengthened macroeconomic position and the determination with which we reacted to this shock”, Tabaković said.

The NBS said that inflation is expected to remain low and stable.

Source:  http://rs.n1info.com/English/NEWS/a599009/Serbian-central-bank-says-inflationary-pressure-low.html

Air Serbia delays resumption of regular flights to June 15

May 13, 2020

Air Serbia said on Wednesday that it will resume regular flights on June 15 instead of June 1 as originally planned, in line with the recommendations of the European Commission to extend the travel restrictions.

“Air Serbia, the national air carrier of the Republic of Serbia, will postpone the start of scheduled flights from the planned 1 June to 15 June, in view of the European Commission’s recommendation regarding the extension of temporary restrictions. As many of the countries affected are served by Air Serbia’s network, the Serb flag carrier is compelled to postpone the start of its anticipated scheduled air services,” a press release said.

It added that flights to a limited number of destinations (London Heathrow, Frankfurt, Zurich, and Vienna), which were announced to resume on Monday, May 18 will go ahead as planned but at reduced frequency. The press release said that Air Serbia is prepared to resume regional flights.

"Our fleet and our staff are ready to resume scheduled passenger services at any time. The start and scope of our services, however, depend not only on us but on the decisions and guidelines of national, foreign, and international bodies and civil aviation authorities, and on the changes in the travel restrictions valid in the countries we serve. We are closely following the decisions of competent authorities, while adjusting our operation and plans to present conditions", Air Serbia CEO Duncan Naysmith is quoted as saying.

Air Serbia said earlier that it would gradually resume flights following the break caused by the coronavirus pandemic.

Source:  http://rs.n1info.com/English/NEWS/a598969/Air-Serbia-delays-resumption-of-regular-flights-to-June-15.html

CoE Development Bank approves 200 million Euro loan for Serbia

May 13, 2020

The Council of Europe Development Bank (CEB) said that it had approved a 200 million Euro loan to Serbia to finance health care system expenses aimed at combatting the coronavirus pandemic.

“The Serbian government has been swift to implement a range of measures, including the purchase of emergency equipment and supplies, to help contain the spread of COVID-19. The CEB loan, in the form of a Public Finance Facility (PFF), will cover gaps in the extraordinary budget lines created for COVID-19 mitigation measures,” a CEB press release said.

It added that the loan was approved to help cover health care service expenses and ensure its stability, including the protection of medical staff. “It will allow Serbia to finance the cost of medical and pharmaceutical supplies, medical equipment, patient monitors and coronavirus tests,” the press release said adding that the focus is on improving supplies of protective equipment in medical facilities.

The CEB recalled that it supports the Serbian health care sector through various projects, adding that the loan brings current CEB investments in Serbia to almost 1 billion Euro.

According to CEB Governor Rolf Wenzel “health is a priority area for CEB financing and the Bank has had excellent cooperation with Serbia in this sector”. “The loan provided to Serbia is part of our efforts to forge ahead united in our fight against this pandemic,” he said.

Source:   http://rs.n1info.com/English/NEWS/a598921/CoE-Development-Bank-approves-200-million-Euro-for-Serbia.html

Serbia issue two billion worth of bonds, finance ministry says

May 12, 2020

The Serbian government has issued bonds worth two billion Euro at an interest rate which is much higher than the loans offered by the International Monetary Fund to countries facing problems because of the coronavirus pandemic.

The Finance Ministry said that Serbia has sold two billion Euro worth of state bonds which are being listed on the London Stock Exchange with a due date of 2027. A press release said that Serbia is the only country in Europe to have ventured out onto the international capital market during the COVID-19 pandemic without the assistance of the European Central Bank in placing the bonds. It added that more than 300 foreign investors, including what it said are “respectable funds, insurance companies and banks” have shown that there is demand for more than seven billion Euro. “The level of the Eurobond sales was two billion Euro with a coupon rate of 3.125 percent, a yield rate of 3.375 percent and a due date of seven years, despite the fact that the initial expectations of investors was that the bonds would be issued at a higher interest rate. However, the interest rate was significantly lowered because of high demand,” the press release said.

In a separate press release, Serbian National Bank (NBS) Governor Jorgovanka Tabakovic (an official of the ruling Serbian Progressive Party – SNS) said that the bond issue is more proof that international investors have full confidence in the Serbian economy. She also claimed that the interest rate on the bonds was lowered by half a percentage point because of high demand at the auction.

The Nova.rs portal recalled that the International Monetary Fund offered countries whose economies were facing problems during the coronavirus pandemic loans at interest rates of 1.29 and 2.1 percent depending on the size of the loan, adding that the Serbian authorities did not want to take the offer. Nova.rs said that the offer went even lower with Bosnia-Herzegovina getting 333 million Euro at an interest rate of 1.05 percent and a 39 month grace period.

The IMF offer of loans comes with the condition of control of how the money is spent which the bond issue does not include.  

The portal said that Serbia issued bonds worth a billion Euro at an interest rate of 1.62 percent and a due date of 10 yearrs in June 2019 and launched a re-issue of Eurobonds in November that year worth 550 million Euro at an interest rate of 1.25 percent.

The Serbian Fiscal Council said on April 6 that the country would need 6.5 billion Euro to deal with the fallout of the pandemic this year alone. Less than a week later, President Aleksandar Vucic said that Serbia would not take aid from the IMF since the country has huge hard currency reserves and 31 tons of gold. Three weeks later the President said that Serbia refused 1.2 billion from the IMF, saying that it should not get further into debt than it needs to.

The Nova.rs portal said that an unnamed group of Serbian citizens who learned beforehand of the latest bond issue sent letters to four investment banks warning them of the situation in Serbia and the risks. President Vucic commented that letter on Monday saying that, despite the letter warning of the political and economic crisis in Serbia, investors were not tricked.

Source:  http://rs.n1info.com/English/NEWS/a598511/Serbia-issue-two-billion-worth-of-bonds-finance-ministry-says.html

Inflation at zero percent, Serbian Statistics Office says

May 12, 2020

The Serbian Republic Statistics Office said on Tuesday that inflation in April stood at zero percent compared to March but rose by 0.6 percent compared to the same month a year earlier.

“The prices of consumer prices and services used to gauge inflation remained at the same level of zero percent on averge in April this year compared to March,” the Statistics Office said.  

Compared to December 2019, consumer prices rose by an average of 1.1 percent. Price rises were recorded in communications (1.4 percent), clothing and footwear (1.3 percent), food and non-alcoholic beveragges (1.2 percent), furniture, household appliances and housing maintenance (0.2 percent) and health care (0.1 percent).

Price drops were recorded in transport (3.7 percent) and alcoholic beverages and tobacco as well as in recreation and culture (0.1 percent each).

Source:  http://rs.n1info.com/English/NEWS/a598671/Inflation-at-zero-percent-Serbian-Statistics-Office-says.html

Serbia chooses to get more expensive debts and spend how it wants

May 7, 2020

Serbia has to take loans because of the coronavirus crisis but the state has decided not to make use of any of the aid offered by the European Commission to the countries of the Western Balkans and has not applied for any of the 750 million Euros in loans under favorable conditions.

When the European Commission proposed a new three billion Euro package of macro-financial aid measures for the countries of the Western Balkans and other European Union partners late in April, Serbia crossed itself off the list.

Officials in Brussels said at the time that one of the criteria for countries to benefit from that package was to ask the IMF for emergency liquidity aid but Belgrade saw no need for that. Finance Minister Sinisa Mali also said that there is money enough in the budget to meet all obligations.

“At this moment, Serbia is completely stable, secure and we have no problem with our obligations. According to our projection that will remain the situation to the end of the year. We are following events in the world and we’ll see. Our projections and those of the national bank are always more conservative and we are completely prepared for an even worse scenario,” the minister said.

Nikola Altiparmarkov, a member of the national Fiscal Council, said that the country should take loans from international institutions. “Certainly yes, if there are loans from international institutions such as the European Union, that should be taken. I am saying that it seems that we did not have that opportunity to date, that is that it is not easy to apply to the European Union if it wants you to prove that you are having balance of payments problems… Becoming indebted on the capital markets will certainly be a challenge, maybe that will have to be at some higher rates than in the past but unfortunately that is inevitable for Serbia and other countries,” he said.

Mali is planning even more debt, to the tune of three billion Euro and 455 billion Dinars in the national currency (some 3.9 billion Euro) The minister did not specify how Serbia will increase its debt. N1 has learned that the government has decided to sell a large number of state bonds. Those sources mentioned two billion Euro.

The bond offer could be made on Serbia’s behalf by big global banks such as the Deutsche Bank, City Bank, Paribas and JP Morgan. The buyers would get guarantees from those banks that the operation will be safe. These bonds are usually sold with a due date of five to 10 years but the interest that is paid by the state is higher than the favorable conditions for loans from European financial institutions. On the other hand, the money from the sale of bonds can be used by the government as it sees fit with no obligation to explain what it was spent on.

Source:  http://rs.n1info.com/English/NEWS/a597145/Serbia-chooses-to-get-more-expensive-debts-and-spend-how-it-wants.html

World Bank Warns of Looming Recession in Western Balkans

May 7, 2020

The World Bank foresees an economic recession in the Western Balkans as a result of the coronavirus pandemic.

The World Bank’s latest Regular Economic Report (RER) predicts a negative regional growth between -3% and -5.6%. With the high uncertainty brought about by the pandemic, the report uses a baseline scenario, that assumes preventative restrictions will be lifted by the end of June and the economy will begin to recover in the second half of the year, as well as a downside scenario, that assumes restrictions will be lifted by late August, with economic recovery beginning only in the final quarter of 2020.

The report forecasts a drop in domestic and foreign demand, while limited liquidity and an atmosphere of uncertainty leads to a drop in investment. Social distancing measures and travel restrictions will have a large impact in tourism, which accounts for 50% of employment in the region. The aftershocks of this negative impact on tourism are likely to be felt in the long-term, with changes in consumer behavior being liable to change following the pandemic. Albania, Kosovo, and Montenegro will be especially vulnerable in this aspect, due to their economies’ significant reliance on tourism. 

While Western Balkans governments have rolled out fiscal and social relief measures, a large part of the population in the region relies on self-employment, part-time jobs, and informal employment. These groups are difficult to support through conventional measures. Thus, extended financial support, designed to regional demographic specifics, may be necessary to aid these vulnerable groups. However, policymakers must walk a thin line between mitigating current impact and preparing for economic recovery.

Albania emerges as particularly vulnerable to economic recession in the heat-map drafted by the report. This comes mainly as a result of high rates of self-employment (34.7% of total employment) and informal employment (61% of total employment), as well as the large part the tourism industry takes up in its economy (48.2% of exports). The Albanian government has yet to provide a concrete financial relief plan for informal workers. Meanwhile, both its first and second financial relief packages have failed to comprehensively address the needs of tourism workers.

Source:  https://exit.al/en/2020/05/07/world-bank-warns-of-looming-recession-in-western-balkans/

EBRD chief announces more finances for Western Balkans

May 6, 2020

European Bank for Reconstruction and Development (EBRD) President Suma Chakrabarti said on Wednesday that the EBRD is planning to significantly increase its funding for the Western Balkans to help the region deal with the economic consequences of the coronavirus pandemic.

Speaking at the European Union – Western Balkans online summit, the EBRD chief said that the bank will combine its financial resources with grants from its EU partners and added that the finances for the Western Balkans are expected to rise to 1.7 billion Euro in 2020.  

He said that the EBRD will focus on micro, small and medium-sized enterprises and the financing of trade, energy infrastructure, a bank press release said, adding that the EBRD will invest in growth and new jobs to help the recovery.  

The EBRD will also focus on improving the efficiency and transparency of the public administration, developing competitive and inclusive economies, speeding up the transition to a green ecoomy and promoting regional cooperation.

Source:  http://rs.n1info.com/English/NEWS/a596709/EBRD-chief-announces-more-finances-for-Western-Balkans.html

First QTR budget deficit in Serbia nears 400 million Euro

May 5, 2020

In the first quarter of this year, Serbia’s budget deficit was 46.9 billion Dinars or 398, 997 million Euro with revenues being 2.5 billion Euros, while the spending was over 2.9 billion, the Finance Ministry said on Tuesday as carried by the FoNet news agency.

It added that in March alone, the deficit was 393,9 billion euro.

The state fiscal deficit in the first quarter was about 426 million Euro, and the primary fiscal deficit reached 24.6 million Euro.

Serbia’s public debt was 20,66 billion Euros or 51.9 percent of the GDP on March 31.

By the end of 2019, the state public debt was some 20,3 billion Euro or 52 percent of the GDP.  

Source:  http://rs.n1info.com/English/NEWS/a596171/First-QTR-budget-deficit-in-Serbia-nears-400-million-Euro.html

Serbia's deficit on high rise in three months of 2020

April 30, 2020

Serbia's foreign trade deficit in the first three months of this year was 1.76 billion Euro, or 20.6 percent higher compared to the same period of 2019, the country's Statistic Bureau said on Thursday, as quoted by the FoNet news agency.

Serbia's foreign trade deficit in the first three months of this year was 1.76 billion Euro, or 20.6 percent higher compared to the same period of 2019.

The foreign trade exchange was 10.21 billion, up 5.8 percent than in the first quarter of 2019.

At the same period of 2020, the export was 4.23 billion Euro, or 3.1 percent higher compared to the same time in 2019, while the import reached 5.99 billion, an increase of 7.7 percent.

The export/import ratio was 70.7 percent, compared to 73.8 percent in the first quarter of 2019.

The largest foreign trade exchange was with countries which Serbia had free trade agreements with, while with the European Union member states it made 60.5 percent of the total transfer.

The other vital partners were CEFTA countries with which Serbia had 506 million Dollars surplus in trade exchange.  

Source:  http://rs.n1info.com/English/NEWS/a594579/Serbia-reports-higher-deficit-in-2020-first-quarter.html

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