Curbing gray economy "to pull Serbia out of crisis"

Saša Radulović says it was "defined" that "a curb on the gray economy is Serbia's greatest chance and impetus for overcoming the crisis."

Source: Tanjug

The Serbian minister of economy said this transpired during talks with economic expert Dominique Strauss-Kahn, who was recently appointed an adviser to the Serbian government.

"If we manage to channel just a small part of that economy into legal flows, we will have an official increase of one-two percent in the gross domestic product (GDP) in the next two years," Radulović said at the Serbian Chamber of Commerce (PKS), where he attended a presentation of the "Top 500" publication.

He underscored that Serbia should not repeat the mistake that it made a year ago when taxes were raised as part of the process of fiscal consolidation, which resulted in a slump in economic activity and a drop in retail trade turnover.

"One year on, we have a smaller economy and bigger problems. We must not repeat this mistake," the minister said.

Radulović says that the Serbian government is looking for solutions at the moment, through public spending cuts and measures for encouraging economic growth.

The goal is to make economy less dependent on subsidies, and more on sound foundations.

The minister also announced a regulatory reform, amendments to the Labor Law, Law on Bankruptcy and Law on Privatization.

The objective is to reduce the state's role in the market, the minister said, noting that economy is mostly state-owned.

The issue of around 615 companies that fall under the jurisdiction of the Privatization Agency must be solved, Radulović said, adding that they hire a total of 100,000 workers.

Out of these 615 companies, 179 are in the restructuring process, and the government should resolve their status by mid-2014, he said.

Amendments to the Law on Bankruptcy should facilitate the sale of assets, Radulović said.

Another issue is the poor liquidity of economy, since a big part of economy is in the pre-bankruptcy or bankruptcy stage, which is the consequence of the bad privatization, the minister said.

All public enterprises should submit their performance records, and thus help authorities ascertain their assets, financial standing, liabilities, suppliers, their "full blood count", the minister said, adding that the authorities will insist on transparency.

The public will be informed as soon as the government takes a stand on a package of measures, Radulović said.

That is expected in early October, the minister said, adding that plans will not be made public until measures are determined in a government meeting.

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