Inflation in Serbia has exceeded the upper limit of the target range, because there has been a rise in prices of food and imported goods, as predicted by the National Bank of Serbia, Governor Dejan Soskic told a press conference. He added that at the moment Serbia needs an agreement on structural reforms, which will launch the country's economy and provide the necessary growth. Zorica Mijuskovic has more.
At the beginning of the second quarter, inflation in Serbia recorded a slight increase, which is consistent with the price movements predictions of the National Bank of Serbia, and the key reasons for this were higher prices of food and imported goods. With 2.7%, over the past two months food prices have almost doubled and inflation has now reached the upper limit of the target range. Governor Dejan Soskic says there is no reason for concern, pointing that inflation will not exceed the planned range and declining trend in inflation will be again seen at the end of the year. Such a state will remain unchanged by the autumn, when regulated prices are expected to grow as a result of exchange rate adjustment. However, Serbia urgently needs both short- and long-term fiscal consolidation, which implies greater use of dinar as a legal means of payment. To achieve these objectives, it is necessary to ensure the continuation of the arrangement with the IMF.
According to the governor, the problem businesses face in Serbia is not inflation, but the high public debt, which threatens to disrupt the overall economic balance in the country. The governor is, however, still optimistic, because he believes that the situation can quickly improve if the new government decidedly implement required structural reforms, which would position Serbia among the countries with a dynamic economic growth and create conditions for the increase in employment.
National Bank of Serbia Governor also stated that there is no reason for him to resign, or to argue with politicians on the subject. Responding to a reporter’s question concerning speculations that a new ruling coalition wants to see Jorgovanka Tabakovic at this position, Soskic added that the Central Bank has been subject to criticism from both ruling parties and the Opposition and that he does not mind criticism. The Governor said that he does not see the statement of PM designate Ivica Dacic, who criticized the financial sector, as an attack against the Central Bank. As for the agreements that would facilitate loans taken by enterprises and citizens, according to Soskic, those should be reached by banks and their customers, not by banks and the state. The task of the prime financial institution in the country is to protect individuals' deposits in banks and companies, that is, to ensure financial stability and prevent the bank's operations that would affect those agreements. Soskic specified that the National Bank of Serbia has the task to protect shareholders' equity from losses and from poor management decisions that the owners have made. The Central Bank has discovered problems in the operations of "Agrobanka," the Governor said, noting that the ones to blame are those who created the problems, not those who discovered them. The fact that the Agrobanka’s license has been revoked is a failure of owners or shareholders, not supervisor, i.e. NBS, concluded Soskic.