Serbia’s government has unveiled an ambitious economic program aiming to increase employment, domestic production, export and investments.

“The strategy ‘Serbia 2020′ is not a wish list, but a cluster of goals in conformity with Serbia’s EU aspirations,” said Serbia’s Deputy Prime Minister for European Integration Bozidar Djelic.

Serbia’s is very much dependent foreign funds, trade and other speculation in goods and Serbia’s PM Cvetkovic said that the plan is a shift away from that.

Cvetkovic, however, tried to lower the plan’s short-term expectations by saying that the plan is a long-term strategy of the country’s development.

“It is crucial for the economic growth to be based on the production of exchangeable goods and boost in export and investments,” Cvetkovic said.

In a recent note to their clients, Nomura Global Research praised Serbia for creating conditions to attract foreign investment that will fuel growth.

A Nomura analyst noted that investor incentives, low taxes, a skilled labor force and a lower currency are signs of a shift in the country’s growth model toward investments in industry that will spur average economic expansion of about 5 percent in the medium term.

However, Nomura warns that Serbia’s key test is whether it will stick with its plan to curb government spending.

Critics say that the plan is over the top because the government is bereft of funding, weak financial sector, high unemployment rate and a decreasing value of currency that is eroding the purchasing power of the consumers who rely on imported goods.

Last weak International Monetary Fund’s board of directors approved a $4 billion loan to Serbia in order to boost its balance of payment problems and its domestic currency.

It is estimated that some 700,000 people work in the black market because of a lack of available jobs or because the available ones don’t pay much.

In a sign of market’s low confidence in government finances, Serbia’s financial market would not accept any Treasury notes that were not linked to the Euro. Last week, however, the government canceled its planned 6 month Treasury bill auction linked to the Euro.

“If this plan does not address the existing problems, people are apt to think that the plan is just a sloganeering of some better future that will never come,” tells us an analyst.

Djelic says that no alternative plan exists to address these current economic ailments and that the plan is the only available one.

“All critics are welcome to suggest a better alternative. It is easy to criticize an ambitious goal, but we should bear in mind the price of the lack of ambition and the wish to succeed- that is apathy, miserable existence and brain drain,” Djelic said.

In a round table a Better Future – Serbia 2020, Serbia’s PM said that the plan seeks to achieve an 8,000 Euro per capit and 400,000 more employed.

Cvetkovic said that up until now, Serbia’s economy has been based on large domestic spending and reliance on foreign money and that this scheme has been exhausted.

December 27, 2010
SERBIANNA

• A Permanent Economic Emergency