International Monetary Fund (IMF) Resident Representative in Serbia Bogdan Lissovolik said that 2011 will be a hard year for Serbia but not necessarily harder than 2010.

Lissovolik said that a lot will depend on the moves of the Serbian government, the National Bank of Serbia (NBS), business activity and the effort of the citizens to provide a better future for themselves.

The business environment will not be simple, but 2011 can be better than the past year, Lissovolik told B92 television.

The biggest challenge for the government in the next year will be improving the business environment in order to encourage entrepreneurship, said the IMF representative, and said the conditions in the private sector need to be radically changed, following the example of Slovakia where all business administration can be handled at a single location.

Asked if the two-figure inflation can be contained, Lissovolik said it was cause for concern but not for panic. He assessed that inflation in the first half of 2011 will probably reach 12 plus-minus two percent, but that there is a good chance it will go as low as 4.5 percent by the end of the year – the NBS target inflation rate for next year.

Lissovolik said there were two reasons to be optimistic about inflation in 2011. Reminding that this year’s high inflation was mostly driven by the rise in food prices, he explained that these prices will drop if Serbia has a normal harvest next year, which will lower the consumer price index.

The second cause for optimism is the rise in the NBS reference interest rate, which helped stabilize the Serbian currency and alleviate inflation pressure, Lissovolik explained.

Asked if the capital from the sale of Telekom Serbia will be sufficient for the recovery of the Serbian economy, Lissovik said it would help, but would not be enough under the present conditions.

The IMF resident representative assessed that the money from the sale would be best spent to pay off the most expensive foreign loans and build the necessary infrastructure in Serbia.

Tanjug
January 1, 2010

• A Permanent Economic Emergency