Serbia Bank Governor Cautiously Optimistic

Belgrade | 27 May 2009 | Serbia’s central bank governor Radovan Jelasic sounded a cautiously optimistic note on his country’s economy, but warned that it is still too early to say how much time will be needed for the economy to return to where it was before the current financial crisis.

He said further deterioration of the economic situation in Serbia has been averted.

“I am an optimist from the point of view that we’ve avoided the worst things that we predicted, but in what time period we will be able to return to where we were six or nine months ago, I am afraid that will last a little longer,” said Jelasic.

Jelasic said that an International Monetary Fund, IMF, mission will visit Serbia in August to review
the measures the government has taken to balance the budget, after it took out a 3 billion euro loan from the Fund earlier this year.

The central bank governor said that it will then become clear ”whether there is any need to make a (further) correction, or if the measures taken so far will be enough”. One of these measures could be an increase in value added tax, VAT, but it is still too early to say whether this tax will be increased or not.

“It will be clearer then whether the measures taken so far are sufficient or if there is need for additional measures for budget stabilisation,”  he said, adding that “the possibility of increasing VAT is foreseen by a memorandum signed between the government and the IMF following the closing of a new credit arrangement”.

Jelasic responded to suggestions from the Association of Small and Medium-Sized businesses, that the best solution to the crisis is to cut the central bank’s principal interest rate by saying that he would be happy to do so but that inflation is currently too high to permit this. Source: Balkaninsight

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Posted by admin on May 28 2009. Filed under Banking & Finance, Economy, Region. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry