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Key Economic Data
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $
         
GNI per capita
 US $ 106
Ranking is given out of 208 nations - (data from the World Bank)


Update No: 169 - (26/02/12)

Serbia has experienced some turbulence in the past months, as Boris Tadic’s government faces a mountain of economic problems: swelling unemployment, a withering report from the IMF on its budget and downgraded growth prospects. Politicians however, have other matters on the agenda – such as upcoming elections and ongoing problems with neighbouring Kosovo.

An unlikely climatic event has proved one of the biggest issues to have happened in Serbia over the past months. The cold snap which has wreaked chaos across all of Eastern Europe has not left Serbia untouched. Huge snowfalls saw 11,000 villagers trapped by snow in Serbian mountains and least twenty people have lost their lives. 32 municipalities in the country were forced to introduce emergency measures, with helicopter evacuations taking place in the centre of the country and schools and universities closing. Energy consumption sky-rocketed to a record high of 162 GWh a day. Hydroelectric output has been stymied by low water levels, putting an additional strain on coal fired plants, which produce 70% of the nation's energy needs. This has prompted state-run utility EPS to introduce emergency measures, namely reduce power deliveries to more than 200 industrial users. Local street lights have been dimmed too as a nationwide energy-saving initiative. As the snow has melted, ice floes have moved down the Danube damaging dozens of small boats. The estimated financial cost of the cold snap is $660 million.

This is hardly good news for a country which is already wrestling with budgetary issues. A recent IMF mission to Belgrade ended without a deal to allow the government to borrow from the fund. Under the agreement with the IMF, Serbia's 2012 budget deficit must not exceed 4.25% of gross domestic product. Unfortunately, it already does. In addition to this the government has issued guarantees on loans taken by state enterprises for amounts in excess of that previously agreed. A fundamental problem is that the budget was drawn up under over-optimistic predictions - namely that the economy would grow by 1.5% this year. Regretfully, the latest IMF analyses indicate that 0.5% GDP growth is in itself optimistic. Public debt rose to 47.9% of GDP, exceeding the legal cap of 45%, the fund said. In order to gain access to the first instalment of the $1.4 billion proposed, the Serbian government will have to introduce some major budgetary changes. A review of the arrangement will take place in summer, after the parliamentary elections.

The refusal of the IMF to facilitate the loan is of particular concern to employers who are keen to ensure the international body is involved in Serbia's economic strategies; they are particularly concerned about excess state spending prior to the elections, due to take place on May 6. The IMF has in its analyses revealed a litany of problems relating to the country's finances. It has also advised that for budgetary health, the government should introduce a number of austerity measures which would scarcely prove popular among the electorate. An increase in VAT, up to 20% from a current rate of 18%, is one such measure; another is the reduction of the number of state employees by a third. Government spending overall needs to be capped and the retirement age should be raised. Serbia's unemployment rate has been cited as a key concern; over the past three years, more than 250,000 people, or 12% of the workforce, lost their jobs. Bad debt is a possible pitfall, with non-performing loans at 19.2% of the total credit portfolio, one of the highest rates in the region. In the 2012 Index of Economic Freedom, formulated by the Heritage Foundation and the Wall Street Journal, Serbia was marked as a 'mostly unfree' country, placed at number 98, with a score unchanged from last year.

Corruption remains inherently linked to the nation's economic issues, but of late the government seems to have been making strident efforts to improve. The omnipresent issue of organized crime is another source of concern, particularly in terms of the nation's EU bid. In a positive step forward, on February 3, the presidents of Bosnia-Herzegovina, Croatia, and Serbia met in the Bosnian ski resort of Jahorina to discuss ways of fighting the organized crime that plagues their region. In addition to this, the arrest of four criminals - one of whom is charged in the March 12th 2003 assassination of the late Prime Minister Zoran Djindjic -- is a major advance in the country's battle to extirpate organized crime. President Boris Tadic said the arrests deal "a decisive blow to organized crime, from which it will not recover for a long time". Kosovo, which has been plagued by organized crime and human trafficking, has also seen the establishment of an Anti-Organized Crime Council.

Kosovo is a matter of ongoing, deeply rooted conflict, though recently resumed dialogue between the two countries has been praised. However, Serbian Foreign Minister Vuk Jeremic did not help to ease tensions, painting a sorry portrait of the life of the 100,000 Serbs in the northern enclave of Kosovo, who, he claims, live in "ghetto-like conditions,” adding "in Kosovo, you will see that today in the whole of Europe the most endangered society is the one of Serbs, at least in some parts of the province." This was sharply rebuffed by Kosovar Foreign Minister Enver Hoxhaj. An issue that has stoked tensions further is the fact that on February 14, Serbs began voting in a referendum asking whether or not they accept the authority of Kosovo's ethnic Albanian rulers. Leaders from the European Union, other Western states have urged Kosovar Serbs not to go ahead with the referendum. Even Serbian President Boris Tadic, who has been a vociferous supporter of the rights of the Serb minority, said the vote would "not contribute to dialogue" between Belgrade and Pristina. The result of the referendum was a resounding “no” on the part of Kosovan Serbs, with 99.7% of the region's voters declining to accept the authority of the Albanian leaders. As the referendum was only advisory it will not have any legal effect. The affair has, nonetheless, revealed the extent to which mistrust still reigns in Kosovo, which many Serbs believe should still be part of Serbia. One positive effect however, according to Belgrade-based think tank director Dragan Popovic is that "Serbian leaders from the north lost a good portion of credibility in the eyes of citizens of Serbia. They certainly cannot count on the [current level of] support of official Belgrade in future activities."

Recognition of of Kosovo is not a prerequisite of EU accession, but normal relations are. UN Secretary-General Ban Ki-Moon has praised EU-brokered talks between Pristina and Belgrade as heralding good faith, a reduction in tensions and facilitating freedom of movement in Kosovo’s north, where there have been road blocks and clashes. Another positive note is that France has thrown its weight solidly behind Serbia's bid to join the EU, a project which lies at the heart of Serbian President Boris Tadic's vision for the country’s future. Nicolas Sarkozy has pledged to try to help Serbia achieve EU candidacy status by late February. Swedish Foreign Minister Carl Bildt has told the Swedish parliament that Belgrade has his backing.

February 15 was Serbia Day, with a national celebration, which in Tadic’s words was a chance to fete ”its territorial integrity and indivisibility, […] it honours the libertarian tradition of the people of Serbia regardless of their ethnic, religious and cultural identity.” As long as the country can weather its financial storms, there is progress to be celebrated.

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