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The Government of the Republic of Serbia

In the service of citizens

Eight tenders for large enterprises to be called by end-2004

Belgrade, 16 November 2004

Serbian Deputy Prime Minister Miroljub Labus said today that reforms in Serbia-Montenegro, which were brought to a standstill in the first half of the year, have continued in the second half of 2004 but the European Bank for Reconstruction and Development (EBRD) did not take that into account when compiling its annual transition report.

Miroljub Labus

Labus said at the presentation of the EBRD’s 2004 transition report on Serbia-Montenegro that the slow growth is not a political problem but rather a result of the lack of readiness to enter the second stage of structural and institutional reforms.

According to him, the first stage of transition, which includes auction sales, was graded 3.5 out of 4.3, while the second stage, which involves tenders, structural reform, and corporate management, received a low grade (below two points).

Labus said that Serbia needs political stability, which brings much lower interest rates. Current interest rates in the country are so high that they hinder economic growth. They are the result from high political risk, according to Labus.

He announced that another eight large enterprises will be offered at tenders by the end of the year, as well as five out of 67 large firms that are currently restructuring.

Labus also said that the state must consolidate the debts of large public enterprises, such as power utility EPS and oil company NIS, since with their current liabilities, it will be hard to find buyers for them.

According to him, corporate management, which has also stagnated in the past three years, will be reformed after the new law on receivership comes into force.

He also said that subsidies to loss-making firms will be reduced by the end of the year and over the next year.

Labus added that the banking sector deserves a better grade from the EBRD since it has issued around two million payment cards even though some 10 percent of the population is living on the verge of poverty. He announced that three domestic banks will be privatised by the end of the year, plus a further four in 2005.

He also said that the country’s current account deficit is not sustainable in the long term and that it will be overcome though export-oriented production. Labus added that Serbia will continue with tender sales and the harmonisation of privatisation regulations in 2005 as well as with the privatisation of state equity, which he said is a pre-requisite for the development of a stock exchange.