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The Government of the Republic of Serbia

In the service of citizens

Austria to play constructive role in the process of Serbia-Montenegro's accession to EU

Belgrade/Vienna, 12 September 2005

Serbian Minister of Finance Mladjan Dinkic said today in Vienna after the meeting with State Secretary at the Austrian Ministry of Finance Alfred Finz that Austria will play a very constructive role in the process of Serbia-Montenegro's accession to the European Union.

Mladjan Dinkic

Author: Fonet

Dinkic voiced hope that in the first half of next year, Austria, which has so far shown great interest in the development of countries of southeastern Europe, will provide a constructive contribution to the acceleration of that process.

He said that it is necessary to start negotiations on the elimination of double taxation as soon as possible, by which difficulties for business cooperation between Austrian and Serbian firms will be removed. According to Dinkic, it has been agreed that these negotiations should start in the shortest time possible.

The two officials also touched on the issue of technical cooperation of the two countries' ministries of finance, they agreed to establish cooperation in debt management and budget planning and shared experiences in the implementation of reform of the pension system, which Austria carried out last year.

Finz said that Austria has a very good level of economic cooperation with Serbia-Montenegro and that it will help the state union's relations with the EU. He said that Serbia has made progress in the previous period, especially in the field of public spending and added that Austria will help that process in the future. Dinkic said today at a Bank Austria Creditanstalt (BA-CA) roundtable discussion, taking place in Vienna, that Serbia has achieved macroeconomic stability and its most important economic indicators are good and stable.

During a presentation on economic flows in Serbia, Dinkic also said that the inflation rate is somewhat higher than expected, adding that foreign currency reserves are also on a high level, and that this year, for the first time in several decades, Serbia has a budget surplus.

Dinkic said that the high foreign trade deficit is one of the problems Serbia’s economy is facing. However, he pointed out, in the first half of 2005 there has been a 50 percent growth in exports, as well as an improvement in the structure of export and a simultaneous slowdown in import growth.

Asked to comment on the Serbian government’s plans for structural reforms in Serbia, Dinkic specified that the banking sector will be entirely privatised by the end of 2006, adding that the reform of the insurance sector and privatisation of the public sector are already underway.

He stressed that reforms of social security and pension systems will follow, whereas they have already started in the health and administrative sectors.

When it comes to the judiciary, the Serbian parliament has passed over 90 laws and judicial reforms will continue in the course of 2005, Dinkic said.

Before the participants of the roundtable discussion, which included representatives of the Austrian business and political scene, the Minister pointed out that the business climate in Serbia is increasingly better year after year, though certain difficulties with red tape still remain.

Laws enabling the establishing of companies and running of businesses have been adopted, he said, recalling that certain foreign companies are rapidly expanding, though some others are not.

Dinkic said that part of these problems is upon Serbia to solve, but he also recommended that Austrian businessmen get in touch with the Serbian Investment and Export Promotion Agency (SIEPA), which has been of great help with establishing new companies.

Speaking about the Serbian government’s plans in the political scene, Dinkic said that talks on the Stabilisation and Association Agreement with the EU, which are of extreme importance to Serbia, have been scheduled for October 10.

According to the Minister, Serbia should complete the entire transition process by 2008, which means that apart from completing the privatisation process, it should also join NATO’s Partnership for Peace, the World Trade Organisation (WTO), and get the status of an EU candidate country.

The Serbian government is working on improving the infrastructure and modernising railroad and road networks, and it plans to set aside funds for concession projects for Corridor 10 and the Belgrade-Pozega road.

The Minister said that bilateral trade between Serbia and Austria has reached around $400 million, a quarter of which is exports to Austria and three quarters represent the import of Austrian goods.

During his stay in Vienna, the Minister will also meet with Austrian Minister of Finance Karl-Heinz Grasser.

Also, Minister Dinkic and representatives of the Serbian National Corporation for Housing Loan Insurance will sign an agreement on the participation of Novosadska Banka (as a member of the Erste Bank Group) in the programme of housing loans financing. That way, Novosadska Banka will become the third bank to enter the Serbian government's project for subsidising housing loans for young couples.