Public companies overindebted

– The first pre-condition for the investment to the domestic economy is to have all domestic companies provided with a reliable finacial documentation. Considering that the present financial reports are not stisfactory, it is high time to improve them, said the Finance Minister of the Republic of Serbia, Mr. Bozidar Djelic, yesterday, on the occasion of the first conference on business reporting, transparency, and public insight to financial and business information. The conference was organized in cooperation with the “Price Wterhouse Coopers” Corporation and the UN consultants for the public corporations restrucuring, at the Finance Ministry of the Republic of Serbia.

– A Government experts Team is working on the debts inventory. The Public Companies are overindebted, approximately 70% of the debts are not harmonized, and the use of “specific” accontancy “games” are to often used in the finacial reporting process. The degree of the overindetment is illustrated the best by the fact that JAT still did not pay a “Boeing 727” acquired long time ago, said Mr. Djelic. The “accountancy rules” applied to “make up” the financial reports and statements, the Minister illustrated by the example of NIS – wich is composed of a numerous legal persons, having proper and ballanced finacial reports if considered a part; otherwise, taken as a whole, we can only state a very doubtfull situation.

This is happening usually because there is a situation of each of those firms is crediting the other, said Mr. Djelic, adding that during the next one year period, a special attention will be paid to the finacial reporting process improvement, “which, besides, are not that perfect, even in most sophisticated economies”. The situation within the corporations will be much more transparent, by mid-september, the deadline for the public companies to submit their 2003. Business Plans. Mr. Djelic invited all the representatives of the public companies to join the public debate on the Law on Accountancy, providing for the intoduction of international standards in the finacial reporting.

Mr. Djelic also emphasized that, after the adoption of the fiscal benefits by the Parliament of the Republic of Serbia, an investments increase is expected (approximately 1 billion dollars), and added that these fiscal benefits will be also applied to citizens’ income tax, making it a unique 10% tax rate. The tax on the corporate profit will be reduced from the present 20% to 14%, and it is planned to supress the sales tax on cooking oil and sugar. Remains the fight against the grey economy, that still represents a level of some 40%.