Government plans to maintain high GDP growth rate and boost employment

Serbian Minister of Finance Mladjan Dinkic said today there is no fear of macro economic instability since foreign currency reserves stand at approximately $7.4 billion, and the Serbian government plans to maintain a high rate of GDP growth in the next three years and boost employment.

Addressing the Sixth Summit of Serbia-Montenegro, Dinkic reiterated that the Serbian government plans to conduct a balanced budget policy from 2007 to 2009, with a 7% GDP growth rate.

In June this year the government will propose a reduction of the rate of contributions on income from 14% to 12% in order to encourage employment and added that employers who hire trainees below 30 years of age will be exempted from paying contributions over the next three years
minister said.

The main problem in Serbia is not inflation but unemployment, especially of the young, because of which the plan for curbing unemployment must be implemented even at the cost of a slightly higher inflation, Dinkic said and added that employment growth will be stimulated through tax reliefs.

According to Dinkic, one of the government’s most important goals for the next three years will be the attraction of a greater volume of foreign direct investment, in which process local self-governments will be offered subsidies worth some €2,000 for each new workplace.

Dinkic said that he is not worried about the current payment deficit because that problem will be solved if the export growth continues without new external public borrowing.

By the end of May a tender for the sale of DDOR Novi Sad insurance company will be announced, and that the tender for privatisation of the Serbian Oil Industry is expected in autumn, minister Dinkic said.