At the conference on social market economy, organised by the Konrad Adenauer foundation, Dinkic stressed that the budget has to be altered for the benefit of capital investmentors, since the crisis will decrease international loans currently covering the budget deficit.
Capital investments are independent of the financial crisis, since they are financed by favourable loans from the World Bank and we have to make foreign institutions provide loans to private enterprises as well, otherwise they will lack liquidity, explained the Minister.
Being a small country with an undeveloped market, Serbia did not incur considerable losses on its stock exchange, said the Minister, adding that Serbia can be recommended now as a stable market.
Dinkic pointed out that certain foreign companies, including French car companies, have already shown interest in transferring their plants to Serbia, where production costs are 9 to 10 times lower and the tax system very favourable.
Dinkic announced that the income tax of employees will be reduced even more in order to incite economic development. Therefore, the non-taxeable portion will increase from RSD 5,000 to RSD 8,000, and interest and capital income taxes will be abolished.
He said that the country’s foreign reserves are bigger than the total sum of foreign currency savings and the dinar money supply.
The Minister pointed out that a balance needs to be found between the market and the state’s interventions.
He also said that Serbia should be divided into administrative regions in order to improve cooperation with the EU.
A great proportion of cooperation within the EU is taking place amongst regions, not countries, he said, noting that Vojvodina is actually the only real administrative region in Serbia.
He announced that administrative regionalisation should take place by the end of this government’s term in office.
He said that the market with the EU will be liberalised as of January 1, 2009 and added that there will be fewer monopolies as Serbia approaches the EU.
Dinkic announced a new tender for privatisation of mining and metallurgical complex RTB Bor and a consultancy tender concerning the privatisation of Galenika next week.
He said that privatisation will be completed in the first half of 2009, adding that the remaining ten tenders and 209 auctions will take place by the end of 2008.