International Information Centre for Balkan Studies

Finance Ministry: Serbia’s public debt 56.9 pct of GDP by the end of October

December 6, 2020

The public debt in Serbia by the end of October was some 29.69 billion Euro or 56.9 percent of the country’s GDP, the Finance Ministry said on Monday.

A month ago, it was 56.7 percent of the GDP, while the country ended 2019 with the public debt of 23.94 billion Euro or 52 percent of the GDP.

Also on Monday, Finance Minister Sinisa Mali said Serbia ‘powerfully reacted’ to the coronavirus epidemic and allocated more than six billion euros in aid to save the economy.

He told the state RTS TV that the economic focus in 2021 would be on capital investments which some 2.8 billion Euro would be allocated for, what, according to him, would also be an incentive to the economic development.

Source:  http://rs.n1info.com/English/NEWS/a680688/Finance-Ministry-Serbia-s-public-debt-56.9-pct-of-GDP-by-the-end-of-October.html

Finance Minister: Average salary already at € 520-530 in Serbia

December 6, 2020

Serbia's Finance Minister Sinisa Mali stated that the total state aid to the economy and citizens from the beginning of the crisis caused by the coronavirus pandemic will amount to €6 billion, or about 12.7 percent of the gross domestic product (GDP) of Serbia.

"We want the citizens not to feel the crisis as much as possible and for the less damaged to come out of this pandemic. Last December, we fulfilled the goal we defined at the beginning of fiscal consolidation - that the average salary in Serbia reaches €500. It's now between €520 and €530," Mali said.

The Minister reiterated that from January 1, 2021, pensions in Serbia will be increased by 5.9 percent, minimum wages by 6.6 percent, salaries in health care by five percent, while other employees in the public sector will receive higher incomes by 3.5 percent, and announced an additional salary increase of 1.5 percent for April 1, 2021.

"We had a better VAT collection at the end of November which we expected," Mali told Vecernje Novosti, explaining where the money came from on December 17 and 18 to pay €38.81 to Euro-pensioners and one minimum wage to workers in the hospitality, hotel, tourism, and car rental industries.

Mali said that no foreign investor stopped investing in Serbia due to the coronavirus pandemic, that the value of the foreign direct investment was 1.9 billion Serbian dinars in the first nine months, and that 60 percent of all investments in the Western Balkans came to Serbia.

He stated that the dinar exchange rate will remain stable, and that dinar is worth the same today, if not more than in March, when the coronavirus epidemic started.

Source:  http://rs.n1info.com/English/NEWS/a680434/Finance-Minister-Average-salary-already-at-520-530-in-Serbia.html

Fiscal Council head: Air Serbia fulfils conditions for bankruptcy

December 2, 2020

The President of Serbia's Fiscal Council Pavle Petrovic said on Thursday the greatest risk for mid-term public finances stability were unreformed public and state companies and high wages in the public sector since it was not clear how those two expenses could be reduced.

In an interview with the Belgrade NIN weekly, Petrovic said the national flag carrier Air Serbia's business was unattainable even before the crisis caused by the coronavirus pandemic.

"If we exclude state subsidies from the balance sheet for the repayment of (former company's name) JAT's old debt, the company had an average annual loss of more than 20 million Euros from 2015 to 2019, instead of the reported profit," Petrovic said.

According to him, "there are also hidden liquidity problems since the company failed to cover due liabilities with inflows from regular operations, which is a deficit that was compensated by borrowing.

"Accumulated losses have 'eaten' the company's capital, which in the formal sense means that the conditions for bankruptcy have been met," said Petrovic.

He added the pandemic was not the direct cause of the problems but had exposed them.
"Instead of the regular cash deficit of 30 million Euros in 2020, the company has a deficit of 60-70 million Euros. When we add the obligations due this and next year, we can conclude the company will need at least 200 million Euros to survive by the end of 2021," Petrovic said.

He added that "a thorough reform will be necessary for sustainable business, which is why subsidies should be conditioned by the obligation to restructure. This is the practice that European countries apply in similar situations."

Speaking about the wages, Petrovic said the problem was that "they are not systematically regulated and their growth is not linked to economic parameters. If public sector wages rise relatively strongly even in times of crisis, it is difficult to expect such practices to be easily abandoned during the economic recovery."

He recalled that the introduction of a comprehensive system of pay grades, initially announced for 2015, was postponed again for 2022.

Source:  http://rs.n1info.com/English/NEWS/a679306/Fiscal-Council-head-Air-Serbia-fulfils-conditions-for-bankruptcy.html

Small businesses’ owners protest in Belgrade; State asks for demands in writing

December 2, 2020

The protest of several hundred small businesses’ owners outside Serbia’s Finance Ministry on Wednesday, demanding talks with the Government officials and Finance Minister to help them overcome problems caused by the coronavirus pandemic, ended without a meeting with the officials who told them to submit the requests in writing.

The traffic in the central Admiral Guépratt street was at a halt and demonstrators wore face masks until 3 pm when it added as planned but without the reactions, they requested from the authorities.

Instead, the official message was - submit the demands in writing.

During the protest, the demonstrators held banners reading: ‘Against criminal robbery system,’ ‘This is workers’ rally, without help, we are left in the street,’ Tourist agencies dying,’ ‘Domestic economy is robbed,’ ‘Minister is not economy’s boss,’ and alike, nova.rs journalist reported.

Milena Almond, from the organization for the of entrepreneurs and private business people in Serbia, said that by January 2021, 200,000 people would lose jobs if the state did not react.

“Foreign investors receive huge subsidies, while small local businesses, like bakeries, are punished for the smallest violations,” she said.

The demonstrators said if they were not satisfied with the official reaction, they were ready for further activities, without specifying what they had in mind.

Source:  http://rs.n1info.com/English/NEWS/a678966/Small-businesses-owners-protest-in-Belgrade-State-asks-for-demands-in-writing.html

TOS: 75 pct foreign tourists less in Serbia

December 2, 2020

Serbia’s Tourist Organisation (TOS) said on Wednesday that a total of 48 percent fewer tourists visited the country in the first ten months of this year than at the same period in 2019.

The number of foreign visitors dropped 75 percent, while 22 percent fewer local people toured the country.

The most frequented places in Serbia were spas, Zlatibor resort in western Serbia, capital Belgrade and the northern city of Novi Sad, TOS said.

Source:  http://rs.n1info.com/English/NEWS/a678916/TOS-75-pct-foreign-tourists-less-in-Serbia.html

FC: Serbia's budget should be more restrictive; epidemic threatens finances

December 1, 2020

Next year will be uncertain, and Serbia's budget should have been planned more restrictively, the country's Fiscal Council (FC) has said on Tuesday.

The Government planned a deficit of 178.5 billion Dinars (1,5 billion Euro) assuming that in 2021, economic growth will be six percent while the Fiscal Council said the forecast was "optimistic" and that "it can easily be wrong."

If the Council were right, the revenues in the budget would be lower, so the deficit of the state coffers would be three percent higher than planned.

According to the Council, that also means, the share of public debt in GDP will continue to grow and will exceed 60 percent.

It also said that if the coronavirus epidemic crisis continued, the economy would need a new package of aid measures, which would additionally burden the state treasury.

The Council recommended that the planned deficits should not be less than two percent, and that could be achieved by freezing or minimal growth of civil servants' salaries and by delaying the projects that are "not urgent".

The Council listed the measures and projects which could be postponed during the epidemic as: "very high costs of equipping the security sector, construction of the airport in Trebinje (Bosnia and Herzegovina's RS Serb entity), subsidies for electronic fiscal cash registers, subsidies for taxis, increased allocations for attracting investors, etc."

"Therefore, we recommend the Government to start implementing projects from 2021, which are not a priority, only when the economy recovers," the Council said.
It added the most significant structural problems within the budget were excessive amounts for subsidies and the public sector's salaries.

Source:  http://rs.n1info.com/English/NEWS/a678510/Fiscal-Council-Budget-should-be-more-restrictive-epidemic-threatens-finances.html

IMF: Loan agreement with Bosnia will likely require comprehensive reforms

November 30, 2020

The International Monetary Fund (IMF) will likely demand reforms regarding state-owned enterprises, health sector, financial sector, etc., during ongoing talks with Bosnian officials concerning the 1.5 billion Bosnian marks (approx. €570 million) loan agreement announced earlier this month, IMF representative Andrew Jewell told N1 Monday.

"The conditions that are associated with these funds have not yet been finalized. However, we anticipate that the program will seek reform of state-owned enterprises, the health sector, financial sector, public procurement, public financial management and digitization," Jewell told N1.
Answering the question from the open letter which Bosnia's leading economists addressed to him and the Fund, Jewell said the IMF does not credit local communities, but they do support reforms at the said level. Their interlocutors are strictly entity and state-level authorities, Jewell said.

In the letter, experts also raised the issue of Bosnia's foreign debt. N1 asked how much has Bosnia borrowed so far from this institution and how much it still has to repay, to which the IMF representative said:

“Bosnia and Herzegovina's current debt to the IMF through the Stand-by Arrangements, Extended Arrangement and Rapid Financing Instrument totals to some SDR 1.315 billion (equivalent to about €1.6 billion at today's exchange rate). Of this amount, the current debt is SDR 392 million (about €470 million), the rest was repaid."

Bosnia's top economy experts wrote to the IMF on Monday, warning them against the loan of some 1.5 billion marks, saying it will only be used fo cover current budget spending and the preservation of social order, instead of helping the economy and implementing critical reforms.

Source:  http://ba.n1info.com/English/NEWS/a491158/IMF-Loan-agreement-with-Bosnia-will-likely-require-comprehensive-reforms.html

Over 20 pct of Roma settlements in Serbia without drinking water, survey shows

November 30, 2020

More than 20 percent of Roma's substandard settlements don't have access to drinking water, while 55 percent don't have sewage and 14 percent are without power, a study by Serbia's Government's Social Inclusion and Poverty Reduction Team and the UN Human Rights Team, has shown on Monday.

Marija Obradovic, Minister of State Administration and Local Self-Government told the online 'Mapping of substandard Roma settlements according to risks and access to rights in Serbia, with special reference to the COVID-19 epidemic" conference, that her Ministry would allocate more resources for solving problems the Roma in Serbia had.

She added that following the epidemic outburst, the Ministry called on local authorities to secure access to drinking water for 33,000 people in all informal settlements.

Source:  http://rs.n1info.com/English/NEWS/a678166/Over-20-pct-of-Roma-settlements-in-Serbia-without-drinking-water-survey-shows.html

RSO: Serbia's GDP fell by 1.4 pct in 2020 third quarter; 292,000 unemployed

November 30, 2020

The real decline in Serbia's GDP in the third quarter of this year, compared to the same period in 2019, was 1.4 percent, according to the Republic Bureau of Statistics (RSO) report on Monday.

 GDP growth compared to the previous quarter was 7.4 percent.

In the third quarter of 2020, compared to the same period last year, the real decline in gross value added (GVA) was recorded in the construction sector (18 percent), wholesale and retail trade and repair of motor vehicles, transport and storage, and services accommodation and food (three percent, and the sector of professional, scientific, innovative and technical activities and administrative and auxiliary service activities (7.9 percent).

The GVA growth was recorded in the industry and water supply and wastewater management sector (3.2 percent) and the information and communication sector (six percent).

The fall in GDP of Serbia in the second quarter of this year amounted to 6.4 percent compared to the same period a year earlier, while in the first quarter, the GDP growth was five percent.

 The real decline in Serbia's GDP in the third quarter of this year, compared to the same period in 2019, was 1.4 percent, according to the RSO reported.

The Office also said Serbia's agricultural trade in the first ten months of this year amounted to 32.47 billion Euros, which is a drop of 4.8 percent compared to the same period last year,

The export of goods was about 13.86 billion Euros, or 5.2 percent less compared to the same period last year, while imports were reduced by 4.5 percent, to 18.61 billion Euros.

The deficit was 4.75 billion Euros, a decrease of 2.6 percent. The coverage of imports by exports was 74.5 percent and is lower than in the same period last year when it was 75 percent.

Foreign trade was the largest with countries with which Serbia has signed free trade agreements with. European Union member states accounted for 61.2 percent of total business from January to the end of October.

Serbia's main foreign trade partners in exports were Germany, Italy, BiH, Romania, and Russia, and in imports Germany, China, Italy, Russia, and Hungary.

The second most crucial partner is the CEFTA countries, which Serbia had a trade surplus of 1.55 billion Euros, mainly thanks to the exports of agricultural, electrical machinery and apparatus, oil and petroleum products, road vehicles, and drinks.

By country, the largest trade surplus was realized with neighbouring countries: Bosnia and Herzegovina, Montenegro, and Northern Macedonia.

Of the other countries, the surplus was reported with Romania, Bulgaria, the Czech Republic, Croatia, Slovakia, Great Britain, and Sweden.

The most significant deficit was in trade with China and Germany.

Industrial production in Serbia in October this year was higher by 1.9 percent than in the same month of 2019, while compared to the average in 2019, it was higher by 12.7 percent.

Industrial production in the January-October 2020, compared to the same period in 2019, was 0.3 percent higher.

The Office also said that in the third quarter of 2020, the number of employees in Serbia was 2.93 million, and the number of unemployed 292,000.

The employment rate was 49.9 percent, and the unemployment rate was nine percent. 

Source:  http://rs.n1info.com/English/NEWS/a678064/Republic-Statistical-Office-Serbia-s-GDP-fell-by-1.4-pct-in-2020-third-quarter.html

Serbia late with construction of gas pipeline

November 26, 2020

The Serbian section of the Turkish Stream gas pipeline extension is not expected to be ready until at least spring 2021, missing a previous target for first gas to flow by the end of 2020, the S&P Global Platts portal said quoting industry sources close to the project.

It said that according to Russia’s Gazprom, gas has been supplied via Turkish Stream to Bulgaria, Greece and North Macedonia since early 2020 with the first flows to Serbia and Hungary expected by the end of this year through the 403 kilometers of pipeline in Serbia at a capacity of 13.9 Bcm/year. The Serbian section connects the pipelines in Bulgaria and Hungary.  

Two sources close to the project, who insisted on anonymity, told the portal that the construction of the pipeline through Serbia is behind schedule. The sources confirmed comments by Vojislav Vuletic, president of Serbia's Natural Gas Association, who told Vecernje Novosti daily that the Bulgarian and Serbian sections of Turkish Stream had been connected, but that the compressor station in Serbia was only due to be finished in May 2021.  

Serbian TSO Gastrans and state gas supplier Srbijagas were not available for comment, the portal said. According to the portal’s industry source, Bulgaria would be able to start flowing gas into Serbia via parts of its existing grid if Serbia were able to receive it.

Source:  http://rs.n1info.com/English/NEWS/a676597/Serbia-late-with-construction-of-gas-pipeline.html

Serbian government withdraws loan guarantee for gas pipeline

November 24, 2020

The Serbian government decided to withdraw its guarantees for a 70 million Euro loan to the Srbijagas natural gas supply company, a day after the Parliament Finances Committee approved the guarantees.

The guarantees for that and other loans to state-owned companies were on the agenda of parliament on Tuesday.  

Under the proposal, the state guarantees would have allowed Srbijagas to take loans from three banks to build a gas pipeline from Serbia’s border with Bulgaria to the border with Hungary and other neighboring countries. The loan was to have been taken from the Vojvodjanska Bank, OTP Bank, and the Post Office Savings Bank in Dinars with a hard currency clause with a repayment period of six years and a grace period of two years at an annual interest rate of 1.7 to 1.75 percent plus quarterly EURIBOR. The money would be invested through the Switzerland-registered South Stream AG shareholder society.  

Srbijagas is headed by its CEO Dusan Bajatovic, a high-ranking official of the Socialist Party of Serbia (SPS, a junior party in the ruling coalition). Bajatovic was recently thrown out of a meeting called by the new Energy Minister Zoran Mihajlovic (of the ruling Serbian Progressive Party – SNS) allegedly for failing to comply with her instructions.

Source:  http://rs.n1info.com/English/NEWS/a675741/Serbian-government-withdraws-loan-guarantee-for-gas-pipeline.html

Serbian Finance Minister says bond issue did not raise public debt

November 24, 2020

Serbian Finance Minister Sinisa Mali told parliament on Tuesday that the new issue of state bonds worth 1.2 billion Dollars did not raise the country’s public debt but served to secure the money to pay earlier expensive loans.

The minister said that there was six times more demand than the offer for the Monday Eurobond issue.

Mali said that this was the second bond issue this year and added that 200 of the biggest investors in the world made offers to buy the bond. “This is a historic result for Serbia and its citizens,” he told MPs.  

The bonds were issued at a rate of 2.125 percent and the money will be used to repay the debt from a 2011 bond sale which had a rate of 7.25 percent.

Source:  http://rs.n1info.com/English/NEWS/a675801/Serbian-Finance-Minister-says-bond-issue-did-not-raise-public-debt.html

Serbia's IT sector market value could reach € 600 mil in 2020

November 24, 2020

The value of Serbia's IT market could reach 600 million Euro in 2020, Milos Cvetanovic, Minister of Trade, Tourism and Telecommunication said on Tuesday, November 24, 2020, adding the annual market growth was seven percent.

He added he expected the 2025 market value to be a billion Euro.

"The export of software also rose and in 2019 was 1.29 billion Euro with the annual growth rate of some 30 percent in the last several years," Cvetanovic said.

He said new regulations in telecommunications were planned.

Source:  http://rs.n1info.com/English/NEWS/a675919/Serbia-s-IT-sector-market-value-could-reach-600-mil-in-2020.html

Serbia’s reserves more than 13 billion Euro, central bank governor says

November 24, 2020

National Bank of Serbia (NBS) Governor Jorgovanka Tabakovic said on Tuesday that the country’s hard currency reserves stand at 13.1 billion Euro, including 35.4 tons of gold which accounts for 14 percent of the reserves.

“The hard currency reserves are double what they were in 2018. We are continuing to increase the most stable part of the hard currency reserves, the gold, following purchases in 2019 and this year in agreement with the government,” she told the online Belgrade Economic Forum.  

Tabakovic said that 2.08 billion Euro in foreign direct investments have been made in Serbia, 1.99 billion of which were not re-invested funds. “I hope the projects 2.3 billion Euro in foreign direct investments will be achieved this year,” the Governor said.

Source:  http://rs.n1info.com/English/NEWS/a675675/Serbia-s-reserves-more-than-13-billion-Euro-central-bank-governor-says.html

Fin Min: Serbia refinances most expensive debt by issuing new bond

November 23, 2020

Serbia's Finance Ministry said on Monday, that after a seven-year-break the country successfully returned to the Dollar securities market due to the early repurchase of the 2011 bonds in US Dollars at a yield rate of 7.5 percent and a coupon rate of 7.25 percent.

After the presentation of Serbia's macroeconomic results to the international investment public, as the country with the smallest economic decline in Europe this year, as well as the most considerable expected growth in 2021, the state began collecting bids for a new bond issue worth 1.2 billion Dollars, the Ministry said in a statement.

The new ten-year bonds of 1.2 billion US Dollars were issued at a yield of 2.35 percent, a coupon rate of 2.125 percent and a final interest rate in euros, after the realisation of a hedging transaction, of 1.066 percent.

The realised rate is seven times lower than that of bonds issued in 2011, which the new issue aimed at as well.

The bonds will be listed on the London Stock Exchange, the statement added.

Finance Minister Sinisa Mali said the demand of over six billion Dollars five times more than the offered value expressed by 200 respectable, primarily American and British funds, insurance companies and banks, was realised,

"All this shows the great confidence of investors in the reforms implemented by Serbia's Government in the economy and public finances," he added.

"We used the favourable conditions, the best this year, to once again enter the international financial market and replace the more expensive debt with a much cheaper one. Also, this is the lowest interest rate our country has ever received on the capital market, even better than the bond issue from June and November 2019 at a time of significantly more stable market conditions," Mali said.

He added that the funds of the new issue are repaying 900 million Dollars of bonds issued in 2011, out of the total of 1.6 billion Dollars that would mature in September 2021.

"Return to the Dollar securities market and a new issue denominated in the US currency, allows Serbia to remain present in the index of emerging market bonds - EMBI Index, which ensures its visibility in the US capital market, as well as on the wider international investment map," Mali said.

By early repayment of dollar bonds with new issues, the share of general government debt in GDP remained at the previously projected level, below 60 percent.

At the same time favorable market conditions were used to provide additional funds for debt service in the coming year, the statement added.

Source:  http://rs.n1info.com/English/NEWS/a675585/Fin-Min-Serbia-refinances-most-expensive-debt-by-issuing-new-bond.html

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