The National Bank of Serbia announced that in 2019 it was a guarantee of stability, a responsible regulator and innovator and that the measures it will take will always aim at raising the living standards of citizens and stimulating business conditions for the economy.
“The continuity of positive results also marked 2019, and it is crucial that we, while meeting our legal goals, maintain stability because it has no alternative”, Governor Jorgovanka Tabakovic said for Beta, referring to the results of the NBS work this year.
She added that in a year marked by 135 years of NBS operation, consistent implementation of monetary policy and successful coordination with fiscal policy, the central bank achieved results that keep market participants’ confidence in economic policy makers and make growth sustainable in the years to come.
“Today, Serbia is a country with a balanced economy and a sustainable future“, Tabakovic said. The statement said that during 2019, the NBS maintained inflation at about two percent, which is also the average around which inflation has moved over the past six years.
In 2019, the dinar strengthened against the euro by 0.5 percent. Amid pressure to strengthen the dinar, the NBS intervened in the foreign exchange market by net purchase of 2.665 billion euros.
One of the leading financial institutions, JP Morgan, in a report on expected macroeconomic and financial developments in developing countries for 2020, estimated that the Serbian dinar is one of two currencies that are fully realistically valued.
Dinar savings increased by about 30 percent in 2019 to a new record level. The share of savings, which has been laid for a period of more than two years, is an additional factor, which is an additional confirmation of the restoration of confidence in the dinar, NBS said.
Serbia’s gross foreign exchange reserves increased by 2.2 billion euros in 11 months to 13.5 billion euros. NBS purchased nine tonnes of gold in the international market in October, increasing the share of gold in foreign currency reserves from seven to about 10 percent. The benchmark interest rate in 2019 was reduced three times by 25 basis points to 2.25 percent, its lowest level in the inflation targeting regime.
“By lowering the benchmark interest rate, the NBS directly contributed to more favorable financing conditions and higher disposable income for citizens and the economy. We also adopted regulations to encourage dinar lending to the economy. Adopting these regulations establishes new rules for banks aimed at supporting purely dinar loans to micro-enterprises, SMEs, entrepreneurs and farmers”, the NBS said in a statement.
The share of problem loans in total loans was further reduced to the new lowest level of 4.56 percent at the end of October, which is about 80 percent less than at the beginning of the Strategy implementation.
As the central bank pointed out, stability, good capitalization and liquidity characterized the banking system in Serbia in 2019 as well. The European Commission has taken a decision which positively assessed the compliance of the regulatory and supervisory framework for banks in Serbia.
Serbia is the only country in the non-EU environment that is included in the list of countries for which preferential treatment for investments is possible.
In 2019, two chapters in European integration have been opened, with the NBS playing an important role – Chapter 9 – Financial Services and Chapter 4 – Free Movement of Capital.
The Board of Executive Directors of the International Monetary Fund has made decisions on the successful completion of the second and third review of Serbia’s economic program, with the NBS contributing significantly to Fitch Ratings and Standard and Poor’s upgrading Serbia’s credit rating over the past year and increasing Moody’s prospects for rating growth.
“We continue with the same intensity and do not change our priorities – we are working for the benefit of our citizens and the economy by strengthening the domestic economy, keeping inflation at a low level, and maintaining a stable and sound financial sector in the future. The measures we take will always aim to increase the standard of living of our citizens and stimulating business conditions for our economy”, Governor Tabakovic said for Beta.
