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The Government of the Republic of Serbia

In the service of citizens

Serbian economy to come out of recession next year

Belgrade, 12 October 2009

Serbian Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic said today that Serbia can expect to come out of recession at the latest during the first quarter of 2010, while it will be possible to see the first signs of economic recovery during the last quarter of this year.

Speaking at a press conference, Dinkic said that it is expected that the GDP will fall by 3% this year, which is less than the IMF estimates.

He said that the total budget deficit this year will stand at 4.5% of the GDP, which is below the Euro Zone average, where the deficit is 6%.

Dinkic said that next year the government will make efforts to reduce the budget deficit but spectacular results should not be expected and that the total budget deficit in 2010 is expected to stand at 4%.

He said that this year Serbia’s revenues will increase by 1% to 2% compared to last year, or RSD 10 billion to RSD 15 billion more than predicted by the IMF. The Minister explained that the state revenues showed a downward trend during the first half of the year but began to increase from July onwards and on October 8 this year revenues stood at precisely the same level as during the last year, while foreign currency reserves increased by €1.5 billion at the beginning of the year when compared to last year.

Serbia’s national debt is four times smaller than in 2000, which has made its position during the crisis much stronger, adding that Serbia’s debt stands at 32% of the GDP while the European average is 82.5%, which is over the levels agreed upon in the Maastricht Treaty.

He said that Serbia now has funds to cover the budget deficit until the end of this year and into the next so that the issuance of securities will be reduced and replaced by inexpensive sources.

Dinkic said that our country has €758 million in National Bank of Serbia reserves and added that the deficit is expected to amount to 4% next year, and to cover it €1.6 billion is needed.

Serbia has made loans contracts amounting to €1 billion and will get $400 million from the World Bank, €300 million from the EU and €211 million for Corridor 10, while the remaining part will be covered with the loan from Russia, said the Minister.

He said that Serbia will not withdraw funds from the International Monetary Fund, regardless of the agreement that was reached, and added that the funds will only be used to cover the budget deficit.

The Minister of Economy and Regional Development expressed his expectation that the government will abolish approximately 200 unnecessary by-laws by the end of this year and that the parliament will finish that process by mid-2010.

The goal of a comprehensive legislative reform is to cut unnecessary administrative procedures and reduce operating costs by 25%, said Dinkic and confirmed that the so-called "one-stop” system will be introduced by the end of this year.

Dinkic said that the Serbian government at the last session adopted the Conclusion that the deadlines for the introduction of e-government should be shortened to December 31, 2011 at the latest.