Monday, August 22, 2005

Bill on competition protection prerequisite for EU accession

Serbian Minister of Trade, Tourism and Services Bojan Dimitrijevic said today that the Bill on protection of competition that will be discussed in the parliament on August 29, secures the equality of all market players and encourages economic efficiency.

Speaking at a session of the Serbian parliament's Committee for European Integration, Minister Dimitrijevic said that this law is one of the prerequisites for the conclusion of the Stabilisation and Association Agreement with the EU.

According to Dimitrijevic, one of the main details in the law, which is fully harmonised with EU legislation, is that it establishes, as an independent body, a commission for protection of competition, which is accountable to the Serbian parliament.

The Minister said that the government adopted at yesterday's session the amendments that additionally increase the commission's independence, as required by the European Commission. In this way, the remaining formal objections by the EU to this law have been removed.

The law stipulates that the commission prevents and punishes behaviour that restricts competition, Dimitrijevic said and voiced hope that the commission will be set up by the end of the year.

Dimitrijevic stated that the existing Anti-Monopoly Law is dated, that it does not meet EU standards, and that it enables the creation of new monopolies in the market, as well as the misuse of existing monopolies.

He added that the Bill on advertising, which the Serbian National Assembly will discuss at the session on August 29, prohibits tobacco and alcohol advertising, excluding wine and beer, which are considered food and therefore will be permitted to advertise on television and other electronic and printed media.

The law also envisages that tobacco and alcohol producers would be prohibited from sponsorship of sporting and cultural events, and can only be sponsors of economic gatherings.

The bill also regulates the advertising of products for children and stipulates the prohibition of products that influence children’s behaviour that could morally and physically threaten them, said Dimitrijevic, and added that advertising messages intended for children will not be allowed to contain scenes of violence, including scenes of violence in cartoons.

The Minister pointed out that television series and sporting games will not be allowed to be interrupted by commercials in the future, and added that the bill envisages that the commercial space in public services amounts to 10 percent of the total broadcasting time, and 20 percent in commercial media.

NIS will be gradually privatised with majority state ownership

Serbian Minister of Economy Predrag Bubalo said in an interview for yesterday’s issue of Politika daily that he supports a gradual privatisation process of the entire Serbian Oil Industry (NIS), provided that the state keeps the majority of the share capital, up to 51 percent of all parts, including the refineries.

The Serbian government’s official website provides excerpts of the interview:

The way NIS will be privatised:

- I support privatisation through recapitalisation with participation of a foreign strategic partner, and a possible public tender for shares in which citizens could also take part. Naturally, an independent managerial team must be appointed.

According to the Memorandum, the government has obliged itself to sell its majority stake in the refineries:

- There is no denying it, but some words are disputable. In my opinion, instead of selling its stake, it should be privatised by recapitalisation and the sale of shares through public bids, and the word ‘majority’ in ‘majority state ownership’ should be omitted.

Why recapitalisation and not sale, and why do you insist on majority state ownership:

- First of all, because the money for 49 percent of share capital or less, that a foreign strategic partner would bring through recapitalisation, would end up in the public company, in one of the core activities for enhancing production, technological, and other possibilities. Thus, the value of the state’s share would also increase. If the majority capital is sold, these funds would go into the budget, and the question is how much someone would be interested in investing in the core activity itself, since they have already given a considerable amount for the majority stakes. Or they would keep exploiting the existing possibilities as long as they have interest to do so, and then simply give up. If we sell 51 percent now, the remaining 49 percent will never be as attractive as it is now, since there will be a major shareholder. As for the public offer, I am not eliminating it, but I leave it as an option.

How did other countries do this:

- My arguments are based precisely on the experience of other countries in the region. Except for Romania, which sold the majority stake of 51 percent all at once for €1.5 billion, other states privatised their oil companies more gradually. It took up to ten years, as was the case in Poland, until a foreign partner became a majority shareholder.

About the NIS management:

-It must be independent, freed of any political party influence. The International Monetary Fund (IMF) believed that the only way to enable this is by a foreign partner’s majority ownership, but I think that this is possible regardless of that. I think that Serbia also has good managers, capable of successfully managing a company, and I am not talking about the current NIS management. After all, we could also get competent foreign managers.

Serbia-Montenegro can even hand over the management to a minority partner with 40 percent of the share capital, or a joint mechanism could be established to decide on the most important issues, if the country finds it would yield profit. Besides, we all know that in Croatia, the state is the majority owner of their oil industry (INA), but the management is controlled by MOL, with 25 percent of shares.

Strategic partner for NIS:

- I would like, above all, for this competition to be transparent, that all interested parties compete, as many companies have announced participation, and that the best bidder wins. And who would I like to see as the winner? British Petrol, Shell, Lukoil, OMV, MOL. Approximately, in that order.

About the final engagement with the IMF:

- There is no doubt about the success of the final engagement and the sixth revision. The stakes are too high for anyone not to take things seriously. That is why I insisted that specific deadlines be set, along with the decision on the invitation for bids for an adviser, to decide on the steps to be taken and the precise time they will be realised, and not to create an impression that we are trying to buy time, and not to leave any space to doubt our preparedness for reconstruction and privatisation. But I repeat, privatisation, not sale.

Thursday, August 18, 2005

The average price of fuel will increase by about three dinars per liter

The Serbian government has adopted a decision on a temporary reduction of excises on oil derivatives by about three dinars per liter, so that the average price of fuel will increase by about three dinars per liter, Serbian Minister of Mining and Energy Radomir Naumov said on Thursday.

Petrol price rise sought

Oil giant Petrobart AVIA warned today that a seven-per-cent rise in the price of petrol could be needed as soon as September 9.

The company says that oil refineries in Serbia are already losing about 700,000 dollars a day because of the delay in price rises, and that new rises are already needed because of the strengthening price of crude oil.

In its statement the company said that the conditions for a price rise were already in place on August 9, according to the Regulation on Setting Oil Derivative Prices.

The last rise in petrol prices in Serbia was 11.85 per cent on July 9.

Oil refinery sale: consensus or not?

Finance Minister Mladjan Dinkic says he has secured a majority in the parliament for adoption of legislation repealing the Serbian Oil Industry Act, B92 reported.

Dinkic said that the government had reached agreement with the International Monetary Fund to sell the majority share of two oil refineries and some other divisions of the state oil monopoly at the beginning of next year, but that if the new legislation is passed it will not be possible to begin the process.

However the Social Democratic Party says that there is no consensus over the way to privatise the company, “despite the claims of some officials of the Serbian Government that consensus has been reached within the governing coalition.

In a statement released today the party emphasises that Serbian Oil Industry must first find a strong strategic partner with whom it can be modernised, and then after that discussions can begin on privatising the company.

The vice-president of the Serbian Renewal Movement, Srdjan Sreckovic, also contradicted Dinkic’s claim that consensus had been reached, saying that it had not even been discussed.

“No one has even contacted ministers from the Serbian Renewal Movement and there has been no consultation with the parties of the governing coalition in the Serbian Parliament about this important issue,” he said in a written statement.

Tuesday, August 16, 2005

October 5 - symbolic date for beginning of negotiations on stabilisation

Serbian Minister of International Economic Relations Milan Parivodic said today that it is very important that negotiations on stabilisation and association with the European Union begin on October 5, a date symbolising the beginning of Serbia's freedom.

In a statement to the Tanjug news agency, Parivodic stressed the importance of that date for Serbia and its citizens and said that at this moment the most important political process is accession to the EU.

“The general interest must prevail over individual interests and all political actors of this country must unite over that strategic goal. A very important step is ahead of us and that is the beginning of negotiations on the EU Stabilisation and Association agreement on October 5”, he said.

According to Parivodic, Serbia has achieved very good results this year in the field of foreign investment.

“We have surprised the entire region. We will see between $1.5 and $2 billion in foreign investments this year, which means we have made the longest leap and the greatest advance in relation to all other countries in the region”, Parivodic concluded.

Council alleges “possible corruption” in privatisation

The president of Serbia’s Anti-Corruption Council has asked Vojislav Kostunica to investigate the legality of the situation in the Keramika company.

Verica Barac, in a letter to the prime minister, alleges that the behaviour of police, who have six times prevented the implementation of a court decision allowing the majority owner of the company into the premises indicates the possibility of corruption.

Barac cites this and other privatisation cases, notably the Jugoremedija pharmaceuticals firm, examined by the council as demonstrating a failure to respect the law and contracts, endangering the basic rights of citizens to security of business and private property.

Friday, August 12, 2005

IMF warns for Serbia

The International Monetary Fund has written to Prime Minister Vojislav Kostunica, warning him that loan arrangements will be cancelled if Serbia continues to default on agreements, B92 reported.

Unless conditions agreed on by Kostunica’s government in May are met within a deadline of two months, the present three-year credit deal will be terminated, the IMF warned. This means that, by the end of October the government must implement promised reforms of the pension system and begin the sale of two oil refineries.

If the IMF pulls out of the three-year arrangement, the loss of the next nine-hundred million dollar tranche of credit will not be Serbia’s greatest problem: termination of the agreement would also annul plans to write off part of the country’s debt to the Paris Club of creditors.

Dire consequences
The IMF’s representative in Belgrade, Harald Hirschoffer, says that the government accepted signed the conditions in May in a Memorandum on Economic Policy.

“The IMF Board of Directors, which makes decisions about arrangements, took this as a signal that there was resolve in the Cabinet to implement the reforms which were sought. Within weeks of the IMF Board approving continuation of the arrangement, we could see that this resolve really didn’t exist when it came to reform of the Oil Industry of Serbia and this reform was in fact the critical issue reviewed by the board when it approved the last extension of the arrangements,” he said.

The director of the Free Market Centre, Miroslav Prokopijevic, believes that breaking relations with the IMF would have very serious consequences.

“Less budget revenue, a blow to the dinar, which will be hit either by short-term devaluation or quickly become worthless. That would be a signal for foreign investors to pack their bags quickly and see what’s going on. At the same time it would mean that a seven hundred million dollar debt to the Paris Club won’t be written off,” he said.

Hirschoffer pointed out that the IMF is not asking for the sale of two oil refineries to be completed by October, but wants the process to be started by then. It would be adequate, he says, for a privatisation consultant to be engaged.

New Decisions of the Monetary Council

(Press Release form Governor’s Cabinet)

Due to the enactment of the new Law on Deposit Insurance, the NBS Monetary Council has decided at its today’s session to revise the ratio of required allocation of funds by banks in respect of the new foreign currency savings downwards by 2 percentage points, i.e. from 47 to 45 per cent. This measure by no means represents a result of the NBS estimate on now being the right time for easing monetary policy. On the contrary, the NBS advocates the view that the inflation level reported in the course of the year is quite disturbing and that it should be curbed by choosing the most adequate monetary policy instruments available. Therefore, in addition to the abovementioned measure, and on account of surging inflationary pressures, the Monetary Council has decided to raise the foreign exchange reserve requirement of banks by 3 percentage points which should result in the sterilization of additional liquidity.

The main reason behind the reduction in required depositing in respect of new foreign currency savings is the adoption of the new Law on Deposit Insurance whereby the amount of the insured deposit in commercial banks has been raised from the previously CSD 5,000 to approximately CSD 250,000 or the dinar equivalent of EUR 3,000 per each depositor. According to the Monetary Council estimates, such a significant increase in the amount of insured deposits will contribute to the further growth of new foreign currency savings, although this trend has accelerated substantially in the course of the year. Moreover, the citizens’ confidence in banks may be measured by the amount of new foreign currency savings exceeding EUR 1.8 billion. Following the June record high, newly deposited foreign currency savings rose by EUR 79.5 million which represents its greatest monthly increase from 2001 until the present day.

For the sake of reminder, with a view to provide greater security for the citizens that have placed their foreign currency deposits with banks in conditions where a relatively modest amount of these deposits was insured, the NBS introduced a new requirement reflected in the banks’ obligation to deposit with the NBS 50% of the newly deposited foreign currency savings. In May 2004, this amount was reduced to 47%, and following the adoption of the new Law on Deposit Insurance, the NBS decided to further reduce it to 45%. On enacting this measure, which was previously announced and described as conditional upon the adoption of the mentioned law, the Monetary Council did take into account the fact that the costs of banks in respect of the insurance of natural persons’ deposits with the Deposit Insurance Agency would increase. In view of the reduction of the reserve requirement on citizens’ foreign currency deposits from 47 to 45 per cent and on the basis of the current level of foreign currency savings, the NBS estimates are that the banks’ funds in the amount of CSD 2.7 billion will unfreeze, i.e. around EUR 32.2 million will be returned to banks.

This measure is aimed at reducing banks’ external borrowing, as well as the demand for foreign currency. At the same time, it is expected that banks will be additionally motivated to base their future lending on the domestic accumulation of funds through still higher amount of foreign currency savings. Positive effects of this measure which is expected to release a substantial amount of banks’ funds should be reflected on citizens as well, since now the banks will be able to reduce their lending or to increase their deposit rates.

Reviewing the implementation of monetary policy and bank liquidity within it and assessing that monetary policy should introduce additional measures with a view to reducing the inflationary pressures, the Monetary Council has decided to raise reserve requirement of banks on foreign currency deposits from 26 to 29 per cent. With this measure, the National Bank wishes to send a clear signal to banks that the basis for their lending should be the growing dinar savings, and not external borrowing.

Following the banking sector liquidity and assessing inflationary pressures, the NBS shall gradually reduce the current difference between the percentage of the banks’ required allocation in respect of new foreign currency savings and the percentage of foreign currency reserve requirement, with a view to bringing them to an even level in the foreseeable future.

The NBS shall carefully monitor the implementation of these measures and of the overall monetary policy which is to remain restrictive. At its today’s session the Monetary Council also concluded that the National Bank shall continue to curb the domestic demand and inflation by sterilizing excess liquidity through repo operations.

Montenegro Airlines transports record number of passengers

Montenegro Airlines transported 265,000 passengers in January-July, or one third more than in the same period last year, the company's director Zoran Djurisic said on Tuesday.

Wednesday, August 10, 2005

Karic sells Mobtel

B92 has learnt that business magnate Bogoljub Karic has sold his BK Trade company and with it his share in cellphone operator Mobtel to Austrian businessman Martin Schlaff, B92 reported.

The funds for the sale were paid into Karic’s account this week. BK Trade representatives sitting on the board of Mobtel have been replaced with Austrians. Mobtel director Goran Bozic, who Karic sacked some time ago, has now been re-employed as assistant director.

Deputy Prime Minister Miroljub Labus said ten days ago that one of the government’s priorities after the summer break would be the privatisation of Mobtel after a long period of what he described as “delaying games”.

Policies Valid Only if Issued by Legally Registered Insurance Companies in Serbia

(Press Release from Governor’s Cabinet)

With reference to the announcement that the Swiss company SOS Evasan S.A. published in the daily “Politika” saying that “no state authority of the Republic of Serbia has the right to issue or revoke its operating license”, at the same time inviting our citizens to obtain the policies of this insurance company directly from Switzerland or any other neighboring country or EU state with which Evasan is engaged in business activities, the NBS would like to point to the following facts:

During the supervision of the sale network conducted by insurance representation and brokerage agencies, the NBS established that a number of these agencies sold to our citizens medical assistance insurance policies issued by foreign insurance companies that could not perform insurance activities on the territory of the Republic of Serbia. One of these companies was Evasan from Switzerland whose operating license the NBS did not revoke and could not revoke since Evasan is a foreign insurance company and as such it cannot be granted an operating license by competent authorities of Serbia.

Namely, the Insurance Law stipulates that property and persons in Serbia can be insured only with insurance companies licensed by competent authorities in Serbia, and that by way of exception it is possible to insure property and persons with a foreign insurance company if such insurance is not provided for in Serbia. Given the present situation with licensed insurance companies in Serbia issuing the abovementioned insurance policies bought by our citizens for the purpose of obtaining visas and traveling abroad, it means that the sale of policies of foreign insurance companies performed by the above agencies was illegal. In accordance with the Law, the NBS therefore revoked the operating licenses of these agencies, and some of them were selling policies issued by the foreign Swiss company Evasan.

The NBS wishes to point out that certain foreign insurance companies or foreign representatives, upon the measures taken by the NBS, brought the decision to incorporate their insurance companies or agencies and operate in line with the Law, selling insurance policies to our citizens issued by foreign companies that are licensed by the NBS. The Evasan company, however, adopted no such decision and did not incorporate its insurance company in Serbia which would operate in line with legal regulations and under the supervision of competent authorities.

If the Evasan company officially and legally operates in other EU states it is not clear why it would not do so in Serbia in line with valid legal regulations of this country. Instead, this company wishes to render its services illegally from abroad and even encourages our citizens to act illegally and conclude contracts abroad, under a sham excuse that they “will manage to secure their right to the respect of regulations, as well as the right to decide on their own which insurance company services to use during their stay abroad.”

If the company wishes citizens to choose its services, it is advisable that Evasan should incorporate its own insurance company, which many banks and many other insurance companies have done, and which is the only legally possible solution. However, for the incorporation of an insurance company in Serbia, Evasan would have to deposit EUR 2 million of equity capital, employ people in the country, generate profit, and pay taxes in Serbia.

The explanation probably lies in the fact that the Evasan company for many years made use of the consequences of isolation that befell Serbia, and now, with circumstances changed it does not wish to enter into the competition with other legally registered insurance companies. It is not our aim to elaborate on routes through which money was illegally transferred from Serbia to abroad in the last decade, but it is evident that such a way of issuing foreign insurance policies was more that “lucrative” for this company and that Evasan does not wish to enter the Serbian insurance market. The activities performed by Evasan were therefore “aimed at the promotion of someone’s personal financial interests, to the detriment of the citizens of the Republic of Serbia.”

The NBS would like to warn its citizens once again that when buying insurance policies issued by foreign insurance companies unlicensed by official authorities of Serbia that they bear in mind that no competent institution of Serbia is responsible for such policies. The role of the NBS is to protect the interests of the citizens of Serbia, support the development of insurance companies that operate legally, generate profit and pay taxes in Serbia, and in accordance with all this perform their activities solely in line with the Law.

Saturday, August 06, 2005

Offers for purchase of 'Moscow Hotel'

Serbia Commission for Valuables yesterday opened four offers for overtaking of shares of Belgrade 'Moscow Hotel'. The bidders are 'Serbia' from Italy, UAB Investment Group Ukio Bank of Lithuania, 'Nat West Finance' of Belize and 'Delta M' of Belgrade.

It is now on shareholders to have their say, Blic daily wrote.

Thursday, August 04, 2005

New Water Water 2 product presented

The Water Water (Voda Voda) company, which operates in scope of the Subotica S And S company, presented late on Tuesday the Water Water 2 mineral water, which will be found on the market in half-litre bottles in about 10 days.

Wednesday, August 03, 2005

Foreign Exchange Reserves as of end-July

(Press Release from Governor’s Cabinet)

By rising EUR 79.5 million in July households’ foreign exchange savings hit a record monthly high in the past three years. On the last day of the preceding month, foreign exchange savings reached EUR 1,816.3 million, whereby their growth in the first seven months this year already overshot the overall increase in foreign exchange savings recorded in the entire past year.

Rising continuously in 2005, foreign exchange savings increased by EUR 387.4 million until end-July, which is a 27.1% rise relative to end-2004. The fact that foreign exchange savings shot up EUR 73.6 million in June as well suggests that confidence in the banking sector is also reflected in the fact that citizens increasingly invest foreign exchange received in respect of frozen foreign exchange savings payments in banks in the form of new savings deposits.

Furthermore, the share of savings deposits termed for a period in excess of six months and one year has been steadily increasing, reaching 26.1% of overall foreign exchange savings; this has been attended with a shrinking share of demand foreign exchange savings deposits and savings deposits with shorter maturity.

New Foreign Exchange Savings Hit Record Highs in July

(Press Release from Governor’s Cabinet)

By rising EUR 79.5 million in July households’ foreign exchange savings hit a record monthly high in the past three years. On the last day of the preceding month, foreign exchange savings reached EUR 1,816.3 million, whereby their growth in the first seven months this year already overshot the overall increase in foreign exchange savings recorded in the entire past year.

Rising continuously in 2005, foreign exchange savings increased by EUR 387.4 million until end-July, which is a 27.1% rise relative to end-2004. The fact that foreign exchange savings shot up EUR 73.6 million in June as well suggests that confidence in the banking sector is also reflected in the fact that citizens increasingly invest foreign exchange received in respect of frozen foreign exchange savings payments in banks in the form of new savings deposits.

Furthermore, the share of savings deposits termed for a period in excess of six months and one year has been steadily increasing, reaching 26.1% of overall foreign exchange savings; this has been attended with a shrinking share of demand foreign exchange savings deposits and savings deposits with shorter maturity.

Popovic says brainpower will soon be Serbia's leading brand

Serbian Science and Environmental Protection Minister Aleksandar Popovic told the Belgrade weekly Nedeljni Telegraf on Tuesday that “intelligence will soon be Serbia's leading export brand.”

Popovic said his ministry will set out on a world tour this fall to present the CD it titled 1,000 Serbian Technologies to a “select foreign audience.” Popovic, who is also the Democratic Party of Serbia (DSS) vice president, added that “Serbian scientists, who transcend the local market, should work for exports and not only be mere merchandise.” One of Serbia's priorities is to plug the brain drain, the minister said and announced a series of concrete campaigns aimed at attaining the goal.

Tuesday, August 02, 2005

In 6 months, Montenegro's tourism income reaches amount of 62 million Euros

A total of 178,000 tourists visited Montenegro over the first six months of the year, which is by 17.4 percent more than last year, while the income of tourist services reached the amount of 62 million euros, the Ministry of Tourism said in a statement on Tuesday.

Monday, August 01, 2005

State to buy a portion of Mobtel?

B92 has received unofficial information that high officials of the Serbian government held a meeting last week to discussing the possibility of buying a portion of the shares of the Mobtel telecommunications company from the Karic family.

Before any more further steps can be made, the ownership issues surrounding Mobtel must be cleared up, since the Arbitration Court in Zurich is still looking over the case of whether the Austrian Mobilkom company has majority ownership of the company after buying over half of its shares from Bogoljub Karic.

Former Mobtel director Branislav Andjelic said that the government needs to think long and hard before deciding whether the state should buy the portion of the Mobtel company which Karic still owns. He said that borrowing money from a domestic or foreign bank in order to buy Mobtel and then selling the company to foreign investors is also a bad idea.

Andjelic said that the government also needs to look at the large number of new mobile telephone operators that have recently began working and already have a large amount of users in their systems.

It is also important to note that the EU had already asked the Serbian government to end the monopoly it held on mobile services, to make sure that the government did not own both of the largest operators in Serbia.

Zastava Oruzje's partnership with USA company

'Zastava-Oruzje' (Zastava Weapons) factory of Kragujevac is to sign an agreement on strategic partnership with one USA company, daily Blic wrote.

Apart from mutual appearance in the market, the agreement stipulates mutual development, exchange of technologies and information about new materials and calibers.

The agreement is expected to be signed in August, says Blic.

Ivan Milutinovic company constructs Russian port in Pacific Ocean

The Serb Ivan Milutinovic civil engineering company will construct a major Russian port in the Pacific Ocean for the needs of the Siberian Coal and Energy company (SUEK), the company's representative, Ivan Slepcev, said on Monday.

Dencic says there will be enough wheat

With between 1.5 million tons and 1.6 million tons of this year's yield and 500,000 tons in last year's stocks, Serbia will have enough wheat for its own needs and some for exports, Srbislav Drencic, head of the Novi Sad farming and truck farming institute's cereal grains department, told Tanjug on Monday.

Inflation predictions continue to soar

The latest evaluations by the Institute for Market Research show that the inflation rate in Serbia for 2005 will be “in the best case scenario, about 17 percent.”

Institute experts say that the official estimate of 13.7 percent is “unrealistic.” At a press conference held by the institute, official Sasa Djogovic, that the pressure on prices continues to grow, especially for crude products, which will have an increased effect on the prices of consumer products.

Only a restrictive monetary policy can stop the rise in inflation, he said, adding that decreasing the value added taxes for some products will only slow the inflation process, not stop it.

The worth of the dinar against the euro will experience yet another depression by the end of the year which, if it continues to go on for a longer period of time, could heighten inflationary pressure once again, Djogovic said.

Djogovic said that real investment into Serbian production does not exist yet, which is why an amortization of the excess work force is not possible currently, meaning there are no stronger economic persuasions available.

The economic climate is unsatisfactory; the growth in income is a result of job cuts not an increase in production, Djogovic said, even if it is taken into consideration that many predictions see a slight rise in production taking place by the end of the year.

Sunday, July 31, 2005

Retail prices rise two percent in July

Retail prices in Serbia in July rose two percent against the previous month, with the prices of goods rising 2.1 percent and services by 1.7 percent, the Serbian Statistics Office said yesterday. Compared with December 2004, July prices were up 10.2 percent.

The cost of living in Serbia in July rose 0.9 percent from the previous month and 10.1 percent against December 2004. The discrepancy between the increase in retail prices and the rise in the cost of living was due to different impacts of individual items on the overall index, the Statistics Office explained.

The prices of agricultural products fell 10 percent, while the prices of industrial products rose 0.4 percent on slight fluctuations in the prices of certain goods.

The prices of drinks rose 0.5 percent, while tobacco prices remained unchanged.

Non-food products rose 4.5 percent on the average. The prices of electricity and oil products increased in July but other prices remained unchanged.

The prices of services increased 1.7 percent, on the average of hikes in the prices for utility services, education, and intercity transport.

Foreign trade jumps 11.5 percent in January-June

The volume of Serbia’s foreign trade in the January to June period of 2005 was $6.78 billion, up 11.5 percent from a year earlier, the Serbian Statistics Office said yesterday. Expressed in euros, trade was worth €5.28 billion, a 6.4 percent increase from a year earlier.

Exports in January-June totalled $2.14 billion, a surge of 53.7 percent against a year earlier, while imports in the same period edged down one percent to $4.64 billion.

The decline in imports in the first half of the year was largely due to reduced aggregate spending, slower growth in real wages, monetary and credit policy measures, the launch of value added tax, privatisation, restructuring, and free trade agreements with countries who are signatories of the South East Europe Stability Pact, according to the Statistics Office’s statement.

The trade deficit from January to June stood at $2.50 billion, down 24.2 percent from a year ago. Expressed in euros, the gap was €1.95 billion, down 27.5 percent against the same period in 2004.

Exports-to-imports ratio was 46.2 percent, up from 29.8 percent a year earlier.

The most exported items were intermediate goods, accounting for two thirds of overall exports, and they were followed by consumer goods, which made up 28.4 percent of total exports.

Imports were also dominated by intermediate goods, 63.5 percent, consumer goods, 22.1 percent, and equipment, 14.4 percent of overall imports.

Major importers of Serbian goods were Italy ($334.6 million), Bosnia-Herzegovina (329.6 million), and Germany ($223.3 million).

The largest exporters to Serbia were Russia ($802.9 million), Germany ($471.4 million), and Italy ($411.9 million).

Trade with Italy in the first five months of the year was more balanced than a year earlier, while the biggest trade surplus, of $197 million, was recorded in commerce with Bosnia-Herzegovina.

Thanks to a free trade pact, Serbia also posted a surplus in trade with Macedonia, but deficit remained wide in commerce with Russia due to imports of oil and natural gas.

Restored partnership with Fiat a great step for Zastava

Serbian Prime Minister Vojislav Kostunica has welcomed the re-establishing of cooperation between Zastava and Italian Fiat describing the news that Fiat Punto will be assembled in Kragujevac as a great step for Zastava, which is a symbol of Serbia’s industry.

In a written statement released today, Kostunica said that the good news is of particular importance for Zastava’s workers and but also for all of Serbia’s economy. It is very important for the Serbian economy that Zastava moves forward and revamps production, which will be yet another signal to foreign investors that investing in Serbia pays off.

Thursday, July 28, 2005

June industrial output falls one percent against 2004 average

The Serbian Statistics Office said today that industrial production in June this year fell by one percent against the 2004 average and 2.3 percent against June 2004.

By sector, the production and distribution of electricity, gas, and water dropped 18.4 percent against last year’s average, ore and stone mining fell 7.5 percent, while the processing industry saw an increase of 3.5 percent.

The output of capital goods in June 2005 declined 15.7 percent against the 2004 average, energy output fell 14.3 percent, durable goods 7.4 percent, while the production of intermediate goods rose 3.1 percent and consumer goods 11.2 percent.

This year, through June, industrial production fell 2.1 percent against the same period in 2004, while the June 2005 output, compared with the previous month, showed that the declining trend had slowed down in response to decreases of output in the food and drinks industry, motor vehicles and trailers production, basic metals, rubber, plastic, and non-metals.

NIS privatisation moves forward with preparation of tender for advisor

Serbian Assistant Minister of Energy and Mining Slobodan Sokolovic said today that the ministry has prepared a tender to hire an adviser in the privatisation of state oil company NIS and that it has submitted it to the government for consideration.

Sokolovic recalled that the ministry has now met its commitment to prepare a tender for a privatisation adviser by the end of July and he added that the advisor will be expected to propose the method, stages, and pace of privatisation of the national oil company within five months’ time of the appointment.

He reiterated that the ministry views privatisation as a process of raising capital and securing that NIS will become a profitable and efficient company that will ensure a stable supply at acceptable prices and be a driving force in the development of Serbia’s economy.

Sokolovic explained that the privatisation has been simplistically interpreted in the public and reduced to the sale of the company, which, as he added, is not correct. He also said that the tender for a privatisation adviser applies to all of the company rather than just the refineries.

Fiat, Zastava finalise talks, initial two agreements

Serbian Minister of Economy Predrag Bubalo said today that Italian automaker Fiat and Kragujevac’s Zastava have finalised negotiations and initialled two contracts in Turin today.

Bubalo told a press conference following the government’s session that Fiat and Zastava signed a licensing agreement and an agreement on delivering unassembled Fiat Punto cars to Zastava for final assembly.

Given that Zastava will now have a full Fiat license, the agreement gives the Kragujevac automaker the opportunity to start manufacturing whichever Punto parts it can.

Bubalo recalled that there are more than five million Punto cars across Europe and he announced that domestic producers could attain a significant role in the manufacture of spare parts for the Punto model.

According to him, the first batch will be assembled at Fiat’s plants in Italy by Serbian workers, which will also serve as training for their new job.

Bubalo expressed the hope that the agreements initialled today will be officially signed in early September and he announced that a presentation of Punto with the Serbian symbols and name will be held in Belgrade in October under a gathering between Italian and Serbian businesspeople called “Italy in Belgrade 2005”.

Bubalo noted that Zastava will continue to manufacture all the vehicles from its current programme and he added that an initiative to restore cooperation with Germany’s Opel automaker could yield certain results this autumn.

Tuesday, July 26, 2005

NIS goal to produce 2ml tons of crude oil from own sources

The production of two million tons of crude oil from its own sources, which is 50 percent of the total yearly requirements of the home market, is the strategic objective of the Serbian oil industry NIS, NIS Acting Director General Zeljko Popovic has told Tanjug.

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