NBS top spot candidate on monetary policy

The candidate for becoming the new National Bank of Serbia (NBS) governor, Dejan Šoškić, says there is room for a further relaxation of the monetary policies.

Izvor: Tanjug

Tuesday, 13.04.2010.

11:02

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The candidate for becoming the new National Bank of Serbia (NBS) governor, Dejan Soskic, says there is room for a further relaxation of the monetary policies. Soskic, who currently heads the central bank's council, said this was true in the context of the current inflation trends. NBS top spot candidate on monetary policy “As you know, at the last meeting of the NBS Monetary Committee, the reference interest rate was decreased to 8.5 percent. It is clear that the restrictive monetary policy has recently been less and less present,” Soskic told Belgrade daily Politika. Asked whether the mandatory cash reserves of banks should be lowered in order for them to place this money in the industry more, Soskic said that the reserve should be an instrument for the control of credit expansion. As for the planned sale of a 40-percent stake in Telekom Srbija, he noted no public company should be sold in order to support the dinar exchange rate. “Its sale must be motivated by maximum usefulness for the budget, rather, the tax payers, and to improve the quality of services for consumers. Every sale in support of the exchange rate can only be short-term and without chances of long-term sustainability. The exchange rate can be stabilized for the long-term with increased exports and increased competition in the domestic market,” Soskic said. Asked whether the state is spending too much, Soskic said that the deficit is a clear sign that the state is spending a lot more than it can earn. “That is why it is important to make rearrangements within the existing budget deficit to the advantage of investments in the country’s infrastructure. We must take into consideration that room must be made and that the public debt must be decreased, which means that loans must be paid back. From here, the state must continuously work on creating much better conditions for economic growth and control its own spending,” Soskic concluded.

NBS top spot candidate on monetary policy

“As you know, at the last meeting of the NBS Monetary Committee, the reference interest rate was decreased to 8.5 percent. It is clear that the restrictive monetary policy has recently been less and less present,” Šoškić told Belgrade daily Politika.

Asked whether the mandatory cash reserves of banks should be lowered in order for them to place this money in the industry more, Šoškić said that the reserve should be an instrument for the control of credit expansion.

As for the planned sale of a 40-percent stake in Telekom Srbija, he noted no public company should be sold in order to support the dinar exchange rate.

“Its sale must be motivated by maximum usefulness for the budget, rather, the tax payers, and to improve the quality of services for consumers. Every sale in support of the exchange rate can only be short-term and without chances of long-term sustainability. The exchange rate can be stabilized for the long-term with increased exports and increased competition in the domestic market,” Šoškić said.

Asked whether the state is spending too much, Šoškić said that the deficit is a clear sign that the state is spending a lot more than it can earn.

“That is why it is important to make rearrangements within the existing budget deficit to the advantage of investments in the country’s infrastructure. We must take into consideration that room must be made and that the public debt must be decreased, which means that loans must be paid back. From here, the state must continuously work on creating much better conditions for economic growth and control its own spending,” Šoškić concluded.

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