Ex-minister: New measures, or recession

BELGRADE -- Serbia is in danger of facing a new wave of recession in the spring if the government fails to introduce new economic measures, says Mlađan Dinkić.

(Tanjug)
(Tanjug)

The leader of the opposition United Regions of Serbia (URS) and former minister of finance and economy addressed a news conference on Friday in Belgrade.

Non-selective austerity measures do not contribute to reducing the budget deficit or halting the growth of public debt, but stifle domestic spending and the economy, Dinkić said at a press briefing at the party's headquarters.

The former minister of economy and finance said he believes that the solution lies in early debt repayment - in paying back costly loans, rather than in cutting the citizens' personal spending and investment costs, and pointed out that there is no room for a radical reduction of salaries and pensions.

Dinkić said that "interests are now eating up all savings resulting from stabilisation programmes," adding that the cost of interests would be lower by about EUR 500 million next year if Serbia repaid the EUR 2.5 billion debt in 2014, creating space for more productive investments.

According to him, the EUR 3 billion in cheap loans from the United Arab Emirates "should not be counted on when paying off expensive loans."

"I do not believe that all three billion will arrive from the UAE in the short term. In the long period, maybe," he said, and added that he told Finance Minister Lazar Krstić that including the UAE loan in the 2013 budget was "one of the defects, that will necessitate its rebalancing in the spring."

"It's not serious to have that item in the budget when this has not been agreed on, although it has been discussed," Dinkić, who now serves as deputy chair of the Committee for Cooperation with the UAE, said of the loan.

He proposed that, in addition to repayment of costly loans, the business environment should be enhanced at the same time, and that the government should intervene in market sectors that are affected by the crisis, such as the construction industry.

The government should initiate public works and encourage investments in export-oriented sectors of economy, and also reintroduce subsidised housing loans and boost investments in agriculture, Dinkić said.

Last year, Serbia's exports grew a record 26 percent, with the 2013 real economic growth amounting to 2.4 percent as a result, which proves that incentives for investments in export-oriented branches of the economy must be continued, Dinkić said.

Addressing political issues, he noted that after President Tomislav Nikolić's statement that Serbia "could have an even better government," early elections are increasingly likely.

"What I find particularly encouraging in Nikolić's statement is one sentence - which some media reported, and others did not - that some cabinet ministers are behaving as if nobody did anything before them, and that they are starting everything anew."