"Serbia expects WB support in reform projects"

"Serbia expects WB support in reform projects"

Vujovic specified that the fiscal consolidation measures included cuts in pensions and public sector salaries, adding that 512 companies are to be privatized and that 188 companies employing around 5,000 people will most likely go into bankruptcy.

Despite the devastating floods that hit Serbia in May 2014, the reforms will not be delayed, said Vujovic.

According to World Bank projections, Serbia will see a 0.5 percent drop in GDP in 2015, with a positive growth trend expected in 2016, he noted.

The financial institution's latest South East Europe Regular Economic Report presented this week said that with the exception of Serbia - "positive economic growth is expected this year throughout the region."

Serbia has to attract foreign investors and boost the creation of productive jobs, and it has to build and modernize its infrastructure in order to move closer to the European market, said Vujovic.

Serbia also has a problem with non-performing loans, but it would be too expensive for us to establish a bank that would cover bad loans, the minister said at a roundtable on Serbia.

He pointed out that it would be cheaper and more efficient for Serbia to work with banks and the National Bank of Serbia (NBS) in finding the appropriate solution for property management.

If Finance Ministry cooperated with NBS and the banking sector, the problem with 60-70 percent of bad loans could be resolved, Vujovic said.

The participants of the first panel discussion at the Euromoney conference agreed that European economies are facing the problem of deflation that can cause the economy to stagnate.

For that reason, reforms are necessary to boost economic growth and attract foreign investments, they said.

In addition to this, European funds need to be relied on, particularly in infrastructure projects aimed to facilitate transport.

Philip Bennett, EBRD First Vice President and Chief Operating Officer, said that the priority for European economies is to maintain macroeconomic stability, and address the issues of high public debt, budget deficit and non-performing loans.

He added that, in that sense, many countries with inflation above target levels need a more flexible monetary policy.

It is also important to improve the competitiveness of the economy, said Bennett adding that this requires reforms, better functioning of the labor market, and investments in infrastructure.