Q:
A:
Government will not allow hyperinflation, instability
Belgrade,
9 December 2008
Serbian Prime Minister Mirko Cvetkovic today stated that the government will under no conditions allow hyperinflation and instability in the country, adding that political unity is necessary if the country is to overcome the impact of the global financial crisis.
Mirko Cvetkovic at today's press conference
Speaking at a press conference devoted to the 2009 budget and savings measures, Cvetkovic stressed that everyone in Serbia will have to bear a share of the burden caused by the crisis and the state should bear the largest portion.
In 2009 we will not live better than this year, but the measures the governed intends to take will make sure that we do not live any worse either, said the Prime Minister.
As for the government’s measures to alleviate the effects of the global financial crisis, he said that they not only imply making savings, but also include incentives for the Serbian economy to reach 3.5% economic growth and to continue structural reforms in 2009.
According to him the proposed budget for 2009 restricts public spending and envisages a deficit of 1.5% of GDP.
The Prime Minister announced that around €2 billion will be set aside from the budget and state-guaranteed loans towards the economy in 2009.
He explained that the 2009 budget, which the government adopted on December 6, envisages guarantees of RSD 50 billion for loans which the National Bank of Serbia will grant to Serbian companies.
The Prime Minister said that the terms under which favourable loans will be approved are being drafted, adding that next year’s budget envisages subsidies for the economy of RSD 18.7 billion, which will be allocated through the Development Fund.
Investments in infrastructure projects, which ensure economic and employment growth in the country, are listed in the budget section dealing with capital investments, for which RSD 40 billion has been designated, Cvetkovic stressed.
He noted that loans from international financial institutions have also been secured for infrastructure projects, including Corridor 10, as well as for SMEs.
Cvetkovic said that according to the National Employment Service there have been no mass lay-offs so far, adding that encouraging the economy is the correct way to prevent that.
He noted that the global crisis will mostly affect Serbia’s foreign trade and the influx of foreign investment.
According to him, demand in developed countries will decrease due to the crisis, which is why their economies will try to export products to our market more aggressively.
On the other hand, their markets will be closed for products from our country, which is a problem we must solve, he noted, stressing that this is the reason why the greatest portion of the Serbian government’s measures are directed at increasing the competitiveness of the Serbian economy.
As for foreign investments, both Greenfield and Brownfield investments will be affected, he explained, adding that the Serbian economy will not have as much access to loans from abroad as it used to have.
He explained that a Greenfield investment is an investment in an area where no previous facilities existed, whereas Brownfield investment means purchasing or leasing existing production facilities to launch a new production activity or extend the current one.
As for the Horgos-Pozega motorway, he noted that Serbia is waiting until December 31 to see whether the concessionaire will close the financial construction.
The Prime Minister stressed that the government has no intention of going to arbitration and that there is a proposal for breach of the concessionary agreement.
Cvetkovic said that the proposal is not obligatory and that Serbia is not insisting on it.
He also announced that it will be investigated why the government’s recommendation determining the amount of fees for managers of public companies and other state bodies was not applied.
He recalled that although the recommendation was adopted a month ago, it is not being applied, one example being the Central Registry and its Director Vida Uzelac, who, according to media reports earned RSD 1.2 million per month, equivalent to €14,000.
The Prime Minister said no one will be exempted from the government’s recommendation and everyone will suffer the consequences of their behaviour. He also announced the government’s recommendations on the amounts of salaries for the management of public companies and conditions for payment of bonuses will soon be defined.
When establishing bonuses, it must be considered whether the company is a monopoly or plays according to market rules, he said.
Cvetkovic announced that a first draft of this recommendation will be examined today.
The document is being prepared by Minister of Public Administration and Local Self-Government Milan Markovic, the Prime Minister concluded.
In 2009 we will not live better than this year, but the measures the governed intends to take will make sure that we do not live any worse either, said the Prime Minister.
As for the government’s measures to alleviate the effects of the global financial crisis, he said that they not only imply making savings, but also include incentives for the Serbian economy to reach 3.5% economic growth and to continue structural reforms in 2009.
According to him the proposed budget for 2009 restricts public spending and envisages a deficit of 1.5% of GDP.
The Prime Minister announced that around €2 billion will be set aside from the budget and state-guaranteed loans towards the economy in 2009.
He explained that the 2009 budget, which the government adopted on December 6, envisages guarantees of RSD 50 billion for loans which the National Bank of Serbia will grant to Serbian companies.
The Prime Minister said that the terms under which favourable loans will be approved are being drafted, adding that next year’s budget envisages subsidies for the economy of RSD 18.7 billion, which will be allocated through the Development Fund.
Investments in infrastructure projects, which ensure economic and employment growth in the country, are listed in the budget section dealing with capital investments, for which RSD 40 billion has been designated, Cvetkovic stressed.
He noted that loans from international financial institutions have also been secured for infrastructure projects, including Corridor 10, as well as for SMEs.
Cvetkovic said that according to the National Employment Service there have been no mass lay-offs so far, adding that encouraging the economy is the correct way to prevent that.
He noted that the global crisis will mostly affect Serbia’s foreign trade and the influx of foreign investment.
According to him, demand in developed countries will decrease due to the crisis, which is why their economies will try to export products to our market more aggressively.
On the other hand, their markets will be closed for products from our country, which is a problem we must solve, he noted, stressing that this is the reason why the greatest portion of the Serbian government’s measures are directed at increasing the competitiveness of the Serbian economy.
As for foreign investments, both Greenfield and Brownfield investments will be affected, he explained, adding that the Serbian economy will not have as much access to loans from abroad as it used to have.
He explained that a Greenfield investment is an investment in an area where no previous facilities existed, whereas Brownfield investment means purchasing or leasing existing production facilities to launch a new production activity or extend the current one.
As for the Horgos-Pozega motorway, he noted that Serbia is waiting until December 31 to see whether the concessionaire will close the financial construction.
The Prime Minister stressed that the government has no intention of going to arbitration and that there is a proposal for breach of the concessionary agreement.
Cvetkovic said that the proposal is not obligatory and that Serbia is not insisting on it.
He also announced that it will be investigated why the government’s recommendation determining the amount of fees for managers of public companies and other state bodies was not applied.
He recalled that although the recommendation was adopted a month ago, it is not being applied, one example being the Central Registry and its Director Vida Uzelac, who, according to media reports earned RSD 1.2 million per month, equivalent to €14,000.
The Prime Minister said no one will be exempted from the government’s recommendation and everyone will suffer the consequences of their behaviour. He also announced the government’s recommendations on the amounts of salaries for the management of public companies and conditions for payment of bonuses will soon be defined.
When establishing bonuses, it must be considered whether the company is a monopoly or plays according to market rules, he said.
Cvetkovic announced that a first draft of this recommendation will be examined today.
The document is being prepared by Minister of Public Administration and Local Self-Government Milan Markovic, the Prime Minister concluded.
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