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The Government of the Republic of Serbia

In the service of citizens

Export as main driving force of Serbia’s economic growth

Belgrade, 4 April 2011

Serbian Prime Minister Mirko Cvetkovic stressed today that in the period ahead, the government will strive to create incentives to boost export, as this is the only way to achieve long-term and sustainable development.

Addressing a “Competitiveness is the Name of the Game” conference, Cvetkovic explained that these incentives must take into account the principles of competitiveness, because Serbian companies can be successful at the international market only if they offer competitive products.

The government will endeavour to create a predictable business environment, cut down administrative procedures and improve public administration efficiency, he said.

The insufficient amount of finances is one of the major obstacles to Serbia’s economic competitiveness, which is why the government is engaged in the establishment of a development bank and a restructuring model for financial obligations of companies, he observed.

The Prime Minister said that the government is aware of its role in the efforts to bolster the economy’s competitiveness, primarily by securing macroeconomic stability, intensifying reforms, creating a competitive ambience, continuing the EU accession process and attracting FDI.

In order to attain these goals, we need agreement and participation of all stakeholders – the government, businesspeople, bankers, domestic and foreign investors and the entire public, Cvetkovic noted.

Although Serbia’s foreign trade deficit was reduced from €5.6 to €5.2 billion, it is still considerable, he outlined, adding that the starting point for a new model of Serbia’s economic growth is export, as the main driving force of economic growth.

The new model implies stronger export potential, better competitiveness and a higher share of export in GDP, he added.

Cvetkovic reiterated that priorities of the reconstructed government remain the same, underlining that Serbia is committed to its entry in the European family of nations, wherefore its chief goal is to acquire EU candidate status by the year’s end.

The Prime Minister endorsed the National Competitiveness Council which organised today’s gathering, adding that this body should remain a forum for expert discussions, exchange of experience and coordination of activities aimed at boosting the Serbian economy’s competitiveness.

Deputy Prime Minister Bozidar Djelic, who is also chairman of the National Competitiveness Council, stressed that the essence of the government’s Action Plan regarding EU integration is the country’s increased competitiveness.

He noted that Serbia is faced with a challenge to become a competitive country in terms of technology, infrastructure and business, announcing that over the upcoming period a series of laws and measures will be adopted enabling the acquisition of candidate status.

They will refer to the improvement of competitiveness and will concern regulation of property rights, completion of the judicial reform, improving social dialogue and increasing efficiency of regulatory bodies.

Djelic recalled that a series of measures to boost competitiveness have been adopted recently, including the Law on enforcement procedure, amendments to the Law on the budget system and several other bylaws regarding competitiveness.

According to the World Economic Forum, Serbia occupies the 96th position, which means it is ranked more poorly than its neighbours when it comes to competiveness, Djelic said adding that we cannot be satisfied with this position and we must strive to improve our competitiveness.

Responsible politics is a basis for stability, he noted, adding that during the economic crisis, Serbia secured broad international support for the preservation of macroeconomic stability and continuation of reforms.

We secured an SBA with the IMF, the World Bank increased its support to our reforms and the EU extended budget support of €300 million, he specified.

The European Investment Bank approved over €1 billion in 2009 and 2010 for infrastructure construction and SME support, and agreement was also reached with foreign banks not to draw their funds from Serbia.

During the crisis, Serbia reduced public spending and consolidated its budget deficit below 4.5% of GDP, he observed, stressing that Serbia is one of the few countries that did not raise taxes, most notably VAT.

Over €2.5 billion was secured through subsidised loans for the economy, from which over 20,000 companies benefited, he recalled.

Djelic noted that Serbia is the only country whose rating increased during the crisis, and the only country to which the OECD reduced risk category from level seven to level six last February.

Two days following the reconstruction of the government, Standard&Poors raised Serbia’s credit rating, he added, noting that this will have a positive effect on garnering financial support for the economy and citizens.

The Deputy Prime Minister warned that with the current brain drain dynamics, Serbia is ranked 136th of 139 countries, alongside Swaziland, Lesotho and Kirgizstan, while the quality of its infrastructure ranks it as 122nd.

The conference is organised by the National Competitiveness Council with the aim of establishing a constructive dialogue between representatives from the government and the economy to solve key competitiveness issues.

Conclusions adopted at the conference will be included in an action plan for improving competitiveness over the following period.