Serbian public finance sector set in order

Serbian Minister of Finance Mladjan Dinkic said today that the last five years in Serbia have seen the creation of conditions for long-term macroeconomic stability, adding that the tasks in the forthcoming period should be reducing unemployment, inflation and the foreign trade deficit.

At a press conference focusing on the activities of the Ministry of Finance since October 5, 2000, Dinkic pointed out that he is satisfied with what has been done up to this day. As the ministry’s greatest achievements, he mentioned the reduction of the public debt, putting the public finance sector and taxation system in order, as well as the recovery of the banking system, which has added to the reduction of interest rates.

Five years ago per capita GDP was $829, today it is $3,000, while the inflation rate has been reduced from 120 percent to nearly 14 percent, Dinkic said, stressing at the same time that Serbia’s foreign currency reserves have increased from $360 million to $5.2 billion.

Dinkic said that such foreign currency reserves are enough to cover monthly imports for the next five or six months, adding that they also guarantee that there will not be great changes in the exchange rates.

According to the minister, foreign investment should reach $2 billion by the end of the year, twice last year’s amount.

Due to this year’s import growth of approximately 45 percent and an increase of foreign investment, the surplus balance of payments is $1.1 billion. New foreign currency savings have risen from $20 million to $2 billion, while the percentage of public debt in GDP has been reduced from 169 percent to 55 percent since 2000, specified Dinkic.

Dinkic added that Serbia’s foreign debt currently stands at $6.67 billion and internal debt at $4.7 billion. He pointed out that it is expected that the percentage of total public debt in the GDP will be reduced to 50 percent by the year’s end, when the Paris Club of Creditors writes off an additional $700 million of debt.

Dinkic said that this year’s privatisation revenues have already reached 35 billion dinars, up from an anticipated 25 billion, which makes it possible to use the surplus revenue for paying out old debts, primarily to pensioners.

The minister said that since the beginning of the year, there has been a total of 294.5 billion dinars in revenues to the Serbian budget and 284.7 billion dinars of expenses. He explained that the budget surplus of approximately 10 billion dinars is less than the predicted amount due to the reduction in the excise tax on fuel, which served to minimise the effect of the hike in oil prices in the world market.