"Serbia must encourage investors"

NBS Governor Dejan Soskic says that Serbia "must send messages of encouragement to investors", urging at the same time a speedy formation of a new government. That cabinet must introduce measures to tackle the rising public debt, the central bank chief told the state broadcaster RTS in Belgrade late on Monday. "Serbia must encourage investors" Soskic said that a new government will have to call the International Monetary Fund (IMF) instantly so as to receive positive reviews of the arrangement with the Fund. Such approach would reduce the mistrust towards Serbia which has grown among investors in recent months, and would help stabilize the foreign exchange market, and the cost of Serbia's public debt service, he said. Small countries, such as Serbia, should continually send signals that speak of their macroeconomic stability. Therefore, it is vital that the country has the government and parliament which can introduce reform measures, Soskic underlined. Otherwise, the pressures on the national currency would increase, and the cost of public debt service, Soskic noted, cautioning that in that case, the NBS would have to pursue a more restrictive policy which would have an adverse effect on the reference rates and economic activity in the country. Soskic voiced confidence that Serbia would not need to withdraw the funds made available through the precautionary arrangement with the IMF in the case of unforeseen circumstances. The governor said that in late 2012, the inflation rate will be around the upper bound of the target (around 6 percent), and that by the year's end, Serbia will see increased inflationary pressures due to a rise in import and state-controlled prices. Dejan Soskic (Tanjug, file) RTS Tanjug

"Serbia must encourage investors"

Šoškić said that a new government will have to call the International Monetary Fund (IMF) instantly so as to receive positive reviews of the arrangement with the Fund.

Such approach would reduce the mistrust towards Serbia which has grown among investors in recent months, and would help stabilize the foreign exchange market, and the cost of Serbia's public debt service, he said.

Small countries, such as Serbia, should continually send signals that speak of their macroeconomic stability. Therefore, it is vital that the country has the government and parliament which can introduce reform measures, Šoškić underlined.

Otherwise, the pressures on the national currency would increase, and the cost of public debt service, Šoškić noted, cautioning that in that case, the NBS would have to pursue a more restrictive policy which would have an adverse effect on the reference rates and economic activity in the country.

Šoškić voiced confidence that Serbia would not need to withdraw the funds made available through the precautionary arrangement with the IMF in the case of unforeseen circumstances.

The governor said that in late 2012, the inflation rate will be around the upper bound of the target (around 6 percent), and that by the year's end, Serbia will see increased inflationary pressures due to a rise in import and state-controlled prices.