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The Government of the Republic of Serbia

In the service of citizens

Broad public discussion on projects within NIP to begin

Belgrade, 17 May 2006

Serbian Minister of Finance Mladjan Dinkic announced that as of today, a broad public discussion on projects within the National Investment Plan (NIP) will begin, adding that local self-governments, provincial authorities and professional associations and citizens are expected to initiate more projects.

Mladjan Dinkic at today's press conference

Dinkic told a press conference that an e-mail address to which citizens may send their questions regarding these projects has been put up on the finance ministry's official web site. He will either answer the questions personally or forward them to resource ministries to which the projects refer.

He pointed out that the government and finance ministry intend to increase employment this year through the NIP, but also through tax breaks. Together with the economic development increase, the rise in employment rate is based on a hike in export and macroeconomic stability. These are also the basic goals of the government's economic policy, he said.

Speaking about considerable economic growth, Dinkic recalled that in the past two years, the rate achieved was 7.8% and the Memorandum on Economic and Fiscal Policies had envisaged a 7% annual growth rate. This means "one step higher on the ladder" and is in line with the Economic Development Strategy from 2006 to 2009, he said.

Economic development must be based on export expansion, stressed Dinkic and recalled that last year's export went up 30%. The same trend was achieved in the first quarter of 2006, when export figures rose by 28% against the same period last year.

Dinkic voiced expectation that the 2006 GDP growth rate will also exceed last year's, adding that there can be no sustainable GDP growth without macroeconomic stability.

He pointed to the fact that in the first quarter, the inflation rate has been completely in accordance with the projected figures of the finance ministry's anti-inflation programme and is going at the anticipated pace.

Dinkic added that by year's end, the anti-inflation programme will be rigorously implemented and price fluctuations observed, especially when it comes to prices on which no influence can be exerted, such as the price of oil in the world market.

The second precondition which Serbia has to fulfill in order to maintain macroeconomic stability over the long term is to increase foreign currency reserves, Dinkic stressed and said that foreign currency reserves of the National Bank of Serbia (NBS) currently stand at approximately $8 million.

That growth is also expected in the upcoming period, especially following the completion of privatisation process in the banking sector and the conclusion of the tender for the sale of Mobi 63 mobile operator.

Dinkic explained that the increase of foreign currency reserves is one of the reasons why NBS Governor Radovan Jelasic received support from the Serbian government on his intention to repay the debt to the International Monetary Fund (IMF) before the deadline.

Serbia's total debt to this financial organisation for the three-year arrangement which was successfully completed in February this year is over $960 million. The plan of the NBS is to repay $500 million to the IMF this year and the balance by the end of May 2007, taking into account that the current level of foreign currency reserves is almost 7 to 8 times higher than the average monthly level of import, the Minister of Finance specified.

Dinkic stressed that the Ministry of Finance will continue with the implementation of a tight budgetary policy and said that this year's budgetary surplus should reach 45 billion dinars, which is 6 billion dinars more than planned. On top of this, liquid assets worth between 127 and 150 billion dinars are also expected to pour into the budget, which is a basis for the preparation of the national investment plan and amendments to the salaries tax.

He said that the amendments to the Law on citizens' income tax and the law on contributions should be discussed by parliament in June, together with the laws on financing local self-government, on public purchase, and free zones. These are laws that should improve the economic environment and help the realisation of the government's economic goals.

The Minister said that he and the Minister of Economy agreed to support together before parliament the sixth law from this package as well, which is the amendments to the Law on the chambers of commerce, which proposes abolishing the payment of contributions to Serbia's chambers of commerce and the introduction of the principle of voluntary contributions in their financing.

Speaking about legal projects, Dinkic said that the preparation of a law on denationalisation is drawing to a close and that it should appear before parliament in September, but that will however also depend from other line ministries that take part in its preparation.