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The Government of the Republic of Serbia

In the service of citizens

Serbia improves balance of payment position in seven months of 2005

Belgrade, 17 August 2005

Serbian Minister of Finance Mladjan Dinkic said today that Serbia significantly improved its balance of payment position in the first seven months of the year, with exports surging 54 percent and imports falling by one percent against a year earlier.

Minister Mladjan Dinkic at today's press conference

Dinkic told a press conference that the budget recorded a surplus of 6.3 billion dinars thanks to the collection of value added tax (VAT), which was 42 percent higher than expected, and excise taxes, which brought in revenues 31 percent higher than projected.

According to him, hard currency reserves grew to more than $5 billion, hitting $5.06 billion on August 15.

After a record GDP growth of eight percent in 2004, the Serbian government remains convinced that the economy will grow around five percent in 2005, thanks largely to increased foreign direct investment, which is expected to reach some $2 billion by the end of the year.

Dinkic said that privatisation receipts have reached $3.3 billion, which is a significant increase on the projected 30 billion dinars after the budget revision.

Inflation remains the only problem, as it exceeded the projections in the first seven months of 2005, said Dinkic, while expressing the hope that inflation will be tamed in August and the remaining four months of the year and that it will stay on the 2004 level of 13.8 percent.

Dinkic also announced that the government will approve the calling of a tender for adviser in the privatisation of state oil company NIS at a session tomorrow and he noted that the government had given guarantees to the International Monetary Fund (IMF) that the privatisations of NIS’s two refineries and some other parts of the company will be launched by the beginning of 2006.

According to him, the Ministry of Finance will propose cutting excise taxes on fuels by three dinars per litre, which will reduce budget revenues by 3.2 billion dinars by the end of the year.