Jelasic: Greek scenario for Serbia if it continues to overspend
11. March 2010. | 06:55
If Serbia continues to base its economic growth on excessive domestic spending, this could lead to the "Greek scenario," Governor of the National bank of Serbia (NBS) Radovan Jelasic said at the ongoing Business Forum on Mt. Kopaonik.
If Serbia continues to base its economic growth on excessive domestic spending, this could lead to the "Greek scenario," Governor of the National bank of Serbia (NBS) Radovan Jelasic said .
He pointed out at the ongoing Business Forum on Mt. Kopaonik that Serbia's problem is domestic demand, and added that the solution is to boost public investment, for which the money has already been acquired, and not to increase current spending.
Jelasic stressed that the greatest challenge in 2010 will be current spending, that is the degree to which it will be politics or economy that will determine pay and pension levels.
The NBS governor expressed his hope that Serbia will evade the "snares of the past," and stressed that demand must be based on investments, and not on the growth of domestic spending, which seems to be an easier solution.
Jelasic pointed out that in 2010 there will be no significant increase in bank loans, while the consolidated budget deficit will comprise four percent of the gross domestic product (GDP), and the balance-of-payments deficit between eight and nine percent of GDP.
The governor noted that since September 2008 to this day the Serbian dinar has weakened against the euro by 30 percent, and that 24 percent of this weakening was recorded in the period from September 2008 to February 2009.
According to Jelasic, the inflation rate in 2009 was kept within the planned framework thanks to the drop in demand and freezing of pays and pensions, despite the record-high growth of regulated prices and the significant slide of the dinar.