The inflation has been within the limits of the target rate since October 2013, Governor of the National Bank of Serbia (NBS) Jorgovanka Tabaković has said.
“We are on the right path to preserve the inflation rate at 4 percent in the mid-term period,” the central bank governor stated on Wednesday.
“The GDP growth will total around one percent by the end of the year,” Tabaković told a news conference called to present the Inflation Report for May 2014.
In the short-term period, negative effects will come from the announced fiscal consolidation and structural reforms which are necessary for a sustainable economic growth and this is one of the reasons why the economic growth will be somewhat lower, she said.
The governor expressed the belief that the talks between the Serbian government and the IMF would begin in late May, noting that Serbia does not need a new arrangement for strengthening of its foreign currency reserves, but it needs a precautionary arrangement as a mode of support to the announced structural reforms and strengthening of the foreign investors’ trust in Serbia.
Commenting on the announced subsidized loans worth EUR 1.2 billion, Tabaković said that the funds should not be used for payment of overdue debts and should instead be invested in small and mid-size companies.
She underscored that NBS is ready to back government measures because they point to the determination in the implementation of fiscal consolidation, which was also recognised by foreign and local investors. She noted that Serbia expects an arrangement with IMF to be closed which would contribute to strengthening of foreign investors’ trust in Serbia.
“Foreign investments in 2014 totaled around EUR 200 million and the beginning of the construction of South Stream pipeline is a direct foreign investment which would encourage GDP growth in 2014 and 2015,” the NBS governor said.
As for the country’s position in terms of balance of payments, Tabaković noted that the first quarter of the year was marked by considerable payments for foreign loan interests, which is why the mature interest dues for foreign loans had a 4 percent stake in the total current account debt which added up to 7.1 percent.
Source B92
