Leaders of 17 Eurozone countries gathered at an extraordinary summit in Brussels and reached an agreement on a new package of aid to Greece in the value of close to 159 billion euros in which the private sector will participate. Monetary and fiscal authorities in Serbia, however, are not concerned, although over the past few days the dinar weakened against the euro. Zorica Mijuskovic has more in our regular feature
The emergency gathering of heads of states and governments of the Eurozone in Brussels came to fruition in an attempt to save Greece out of the financial abyss and thus also preserve the foundation of the common currency. Many analysts assessed that the meeting only aimed to buy time, at least until September, and payment of another installment, or in apparently slightly longer run, but without a concrete solution on how to permanently save the European currency and bridge the large gap among the state treasuries of Berlin, Athens, Rome and Lisbon. The United States, the most powerful economic force in the world, is also in the shadow of bankruptcy. Uncertainty is rising in international financial markets since on August 2, Washington may go bankrupt for the first time in history. Wall Street has launched the preparations for the situation where the U.S. government debt securities will no longer be a strong currency. If it really happens that these securities may not be paid at maturity, it is not hard to imagine a chain reaction in the global financial system. Specifically, China, Japan, the Arab world and many other foreign countries have invested foreign exchange reserves into U.S. bonds.
The crisis that hit Greece and Italy is not reflected, for the time being, on the investments that businessmen from these countries started in Serbia, nor on the interest of potential investors from these countries to start businesses. For Serbia, however, it is of utmost interest what will happen with Italy as its leading foreign trade partner and investor. In the first five months this year, the commodity exchange totaled 1.23 billion dollars and was by one fourth higher than last year. The coverage of imports by exports reached a record 90.3%, which is significantly improved compared to the same period in 2010. Economists are concerned that, in the case of “explosion” of the Italian crisis impact on Serbian economy could be far-reaching. More than 250 Italian companies represented in Serbia have a turnover of 2.5 billion euros and employs nearly 20,000 workers. Of the top ten investments in Serbia, two are in the banking sector, and others in the industry. As for the Greek investments, four investments are in the banking sector. The total value of direct investments from Greece over the past decade amount to some 1.79 billion dollars or 1.4 billion euros, which makes Greece the second largest foreign investor in Serbia.
As for the Serbian foreign exchange market, the demand for foreign exchange is a bit higher, which led to depreciation of the dinar. Analysts say that the reason for this latest “slip” is not the result of economic conditions in Serbia, but it is psychological in nature, due to uncertainty in the eurozone. Serbia has a fluctuating exchange rate and the upward and downward movements are normal. Governor Dejan Soskic said the exchange rate will remain stable regardless of the periodic oscillations and pointed out that movements of the past few days was a result of collection of the government securities indexed in euros.
Source balkans.com
