Serbia finance minister looks to keep economic momentum going

Q: The Serbian government has witnessed regular street protests in the past few months. What is your message for investors that are following the situation in the country?

A: There were some protests in Serbia, although now they are dying [down], with fewer people on the streets. In my opinion, protests are a good sign of democracy. What’s important is that the government is stable. We are moving forward with the reforms we started in 2014. At the moment, people are starting to feel the results of the changes that we shaped five years ago, and most people are supportive of the government’s reforms and politics.

In 2014, Serbia was on the verge of bankruptcy. We started a very difficult but decisive reform programme with the IMF. We managed to achieve remarkable results. In 2014, our budget deficit was about 6.2% of GDP, whereas in 2018 we had a 0.6% fiscal surplus – the third year in a row we have achieved a surplus. Public debt in 2014 was about 70% of GDP, it is now at 50.6%.

In addition, Serbia attracted [about half of] the FDI coming into the Balkan region in 2018 – this amounted to about €3.5bn. As a result of that investment, we managed to decrease unemployment from 25.9% in 2013 to 12% in 2018. Our annual GDP growth in 2018 was to 4.3% – one of the fastest growing in Europe. Whatever we are doing at the moment, as far as financial stability and economic growth goes, is to reach investment grade in the country’s assessment by credit rating agencies.

Q: What are your current economic priorities?

A: First, we will concentrate on further economic development. The key issue is how to maintain high GDP growth rates, as this would bring higher salaries, better living standards and more money for the budget. Second, we are diversifying our sources of trade and investment. We have a good relationship with the EU; we are formally on our membership path [and we are making] sure our standards are in line with EU standards. At the same time, we have maintained good relations with the US, Russia and China. We are a small country [and] we would like to have investment from all these countries. That’s why president Aleksandar Vučić insists on regional political stability; it is important that we maintain that stability because it brings more economic development.

Q: The EU has become more wary about Chinese investment. What is your position on that?

A: The Chinese are welcome in Serbia provided they respect our regulations and laws. Recently Chinese companies bid for a copper mine and a still mill, and they did it in a very transparent way. [For the investments in which Chinese companies have shown an interest], they have participated and they have won. And it’s encouraging that we are seeing more and more FDI from China. Tyre manufacturer Linglong plans to invest $1bn in a facility in Serbia. All of these Chinese investors are welcome, as long as they play by our rules. We are perfectly in line with the EU from that perspective.

Q: The privatisation programme is still unfolding, with a tender for Komercijalna banka expected soon. What is the agenda on that?

A: We expect to launch the privatisation process of Komercijalna banka in May with the view of finalising it by the end of 2019. We expect to attract good commercial banks as investors, to become partners with the government through our largest state bank and to participate further in the development of our country. 

Regarding Telekom Serbia, at the moment the government is no longer considering its privatisation. We are actually investing in Telekom Serbia, to keep up with technological changes and the rise of 5G networks.