Serbian Business and Economy

Bill on competition protection prerequisite for EU accession

2005-08-22T09:02:00.000-07:00

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

2005-08-22T08:59:00.000-07:00

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.

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

2005-08-18T09:41:00.000-07:00

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

2005-08-18T09:38:00.000-07:00

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?

2005-08-18T09:37:00.000-07:00

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.

October 5 - symbolic date for beginning of negotiations on stabilisation

2005-08-16T12:41:00.000-07:00

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

2005-08-16T12:39:00.000-07:00

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.

IMF warns for Serbia

2005-08-12T12:40:00.000-07:00

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

2005-08-12T05:48:00.000-07:00

(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

2005-08-12T05:31:00.000-07:00

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.

Karic sells Mobtel

2005-08-10T12:42:00.000-07:00

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

2005-08-10T05:49:00.000-07:00

(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.

Offers for purchase of 'Moscow Hotel'

2005-08-06T05:40:00.000-07:00

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.

New Water Water 2 product presented

2005-08-04T05:35:00.000-07:00

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.

Foreign Exchange Reserves as of end-July

2005-08-03T05:46:00.000-07:00

(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

2005-08-03T05:45:00.000-07:00

Popovic says brainpower will soon be Serbia's leading brand

2005-08-03T05:33:00.000-07:00

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.

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

2005-08-02T05:26:00.000-07:00

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.

State to buy a portion of Mobtel?

2005-08-01T07:42:00.000-07:00

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

2005-08-01T07:39:00.000-07:00

'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

2005-08-01T07:36:00.000-07:00

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

2005-08-01T07:35:00.000-07:00

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

2005-08-01T07:33:00.000-07:00

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.

Retail prices rise two percent in July

2005-07-31T14:48:00.000-07:00

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

2005-07-31T14:47:00.000-07:00

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

2005-07-31T14:32:00.000-07:00

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.

June industrial output falls one percent against 2004 average

2005-07-28T19:52:00.000-07:00

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

2005-07-28T19:50:00.000-07:00

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

2005-07-28T19:47:00.000-07:00

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.

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

2005-07-26T16:05:00.000-07:00

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.

No buyers for Zastava Promet for third time

2005-07-26T16:01:00.000-07:00

An auction has been set for July 28, for the sale of the Kragujevac company Zastava Promet, through which the Serbian government, but the Automobile Factory as well, plan to repay a debt to FIAT of Italy, but, for the third time, no-one has shown any interest in buying this company.

IMF in Podgorica

2005-07-25T16:12:00.000-07:00

The Mission of International Monetary Fund is on a two-day visit to Podgorica, capital of Montenegro. The main topic of discussions with Montenegro officials will be reform of the banking system. Some other issues regarding economy of that republic will also be on agenda.

13 firms sold for over 860 million dinars

2005-07-25T16:08:00.000-07:00

The Serbian Privatisation Agency held the 149th public auction of socially-owned capital today, selling 13 firms for a total of 862.4 million dinars.

Backa Palanka-based Dunav Prevoz was sold to consortium represented by Milenko Damjanic for 105 million dinars, up from the starting price of 19.5 million dinars.

Novi Sad-based Zvezda was sold by a consortium represented by Milan Djurovic for 87 million dinars, up from the starting price of 82.4 million dinars.

Italian Applicazioni Elettriche Generali bought Subotica-based Elektroremont at the starting price of 42.4 million dinars.

Milovan Zeljkovic bought Novi Sad’s Grap Inzenjering for 48 million dinars, up from the initial price of 3.66 million dinars.

Fektic-based firm Feketic was sold to Sombor’s Panonija for 260 million dinars, up from the starting price of 112.3 million dinars.

Sanja Scepanovic bought Novi Sad’s Higijena for 39 million dinars. The initial price was 3.61 million dinars.

Zrenjianin’s Brodarstvo was bought by Nikola Djivanovic for 140 million dinars,while the starting price was 39.6 million dinars.

Construction firm Gradjevinar from Novi Knezevac was sold to Kikinda-based Graditelj for 42 million dinars, up from the initial price of just 3.32 million dinars.

Vidosav Mojsin bought Agrovet from Melenci at the starting price of 59.1 million dinars in a second bidding.

Srbobran-based Vojvodina was sold to Zoran Tomovic in a second bidding at the starting price of 19.1 million dinars.

Akos Ujhelji bought Novi Sad’s Jukoteks in a second bidding for the starting price of 695,000 dinars.

Sombor’s Grafos was sold at the starting price 240 dinars to Sofija Nenadov.

Kula-based M&B-CO bought local firm Sloga for the starting price of 20.1 million dinars. The company was sold in a second bidding.

The auctions of Zastava Sombor from Sombor, Potisje from Ada, Union Mlin from Sivac, Zitoprodukt and Bek from Zrenjanin, Mlin-Pek from Senta, and Bajsa from Bajsa were declared unsuccessful.

Larger foreign investments in Serbia expected in autumn

2005-07-25T16:07:00.000-07:00

Serbian Minister of International Economic Relations Milan Parivodic said today that larger foreign investments in Serbia are expected this autumn.

At a press conference, at which a seven-month report on the work of the Ministry of International Economic Relations was presented, Parivodic said that the largest portion of direct foreign investments will be allocated to infrastructure development, especially that of oil, gas, telecommunications and roads in Serbia.

He said that the Turkish Enka company is interested in constructing a gas pipeline across Bulgaria to Nis. Another major Greek company is interested in building gas pipelines and power plants.

Parivodic said leading international companies, such as Hellenic Petroleum, Mol, Lukoil, Shell and OMV, have shown interest to invest in the oil sector.

He added that the leading international telecommunications company Vodaphone is interested in investing in the mobile phone network in Serbia.

Parivodic stated that around 90 percent of goals set by the Ministry have been achieved since the beginning of the year, adding that the improved image of Serbia is expected to result in an investment boost that should begin in September and October. However, its effects will be best felt in 2006.

Deputy Minister Vlatko Sekulovic said the Serbian parliament will adopt a bill on industrial parks at its first autumn session, with the aim of facilitating red tape for both foreign and home investors. The bill envisages tax reliefs and subsidies in certain economy sectors.

He added that in the past seven months there has been a considerable upsurge in export, which is not an “ad hoc” occurrence but a trend that will last and substantially reduce Serbia’s foreign trade deficit.

The key product for export improvement will be sugar, now controlled by the Ministry with the aim of keeping the quota for privileged exports to the EU market after June 2006, Sekulovic concluded.

Assistant Minister Dragan Penezic said he expects the government to approve a tender for a section of the Horgos-Pozega highway to be called, and another one for a section of the Nis-Dimitrovgrad highway, the latter being the last uncovered section of the international Corridor 10.

Penezic pointed out that tenders for four concession projects in mining have been completed. Eleven leading international companies have submitted tenders for ore exploration on Crni Vrh and in Bor. Their offers will be opened in early September, and these four projects are expected to yield a €250 million investment income, Penezic concluded.

Assistant Minister of International Economic Relations Gordana Lazarevic said that between €660 and 700 million in foreign donations for economic reforms in Serbia are expected by the year’s end, out of which amount €460 million have so far been received, she concluded.

NIS should become generator of Serbia’s economic development

2005-07-22T10:45:00.000-07:00

Serbian Minister of Energy and Mining Radomir Naumov spoke to daily Blic today about the privatisation of state oil company NIS, the announced privatisation of power utility EPS, and electricity prices.

The Serbian government’s official website brings excerpts from this interview:

What model of privatisation of NIS is favoured by the Serbian government:

- The Ministry of Energy and Mining has always advocated raising the value of NIS through the modernisation of its parts before taking it private. The main goal is not to achieve a greater commercial value of NIS during a privatisation process but rather to ensure that Serbia’s oil company is competitive with other oil companies in the region. It is of particular importance to us that we see NIS becoming a generator of economic development in Serbia. The ministry is in favour of selling a stake in NIS to a consortium of companies.

How will power utility EPS be privatised:

- It is too early to talk about privatising EPS. Serbia’s largest public-sector enterprise is on the path of reorganisation and the modernization of its production and transmission capacities. These works are still a priority. It is only after a restructuring is completed, after non-core businesses are divested, that EPS can start preparing for eventual privatisation. In what way it will be done remains to be seen, but the stand of the ministry, that the company should not be sold off in parts, was made known long time ago. The process must be carried out in accordance with the government’s energy policy and a strategy for the development of the energy sector, which has been adopted by the parliament. Judging by experiences in the region, it is clear that hasty piecemeal privatisations of energy companies have brought a lot of trouble to the countries that conducted them. We have closely watched the developments in the region and we do not want to make the same mistakes.

Serbian, Slovenian delegations discuss cooperation in electric power supply

2005-07-22T10:44:00.000-07:00

The Ministry of Energy and Mining said that Ministry representatives and members of a Slovenian delegation today met in Belgrade to discuss possible cooperation in the electric power-supply of the two countries.

Concrete forms of cooperation were discussed, relating to the training of the Ministry’s staff in public administration, training of Serbian Electric Power Company experts, and possible jointly-funded projects.

Slovenian representatives proposed that a Slovenia-Serbia joint group be formed within the Yugoslav Committee for large power grids (JUKO CIGRE).

Special attention was paid to the possibilities of forming a joint body (conference) that would look at the electric power-supply in southeast Europe.

Representatives of the Serbian Electric Power Company (EPS), JUKO CIGRE, the Belgrade Mihajlo Pupin and Nikola Tesla institutes, and the Slovenian Cigre also attended the meeting.

Serbian Oil Industry on parliament agenda

2005-07-22T10:41:00.000-07:00

The Serbian Parliament today continues debate on a government proposal to repeal the Oil Industry of Serbia Act, B92 reported.

Presenting the proposal yesterday, Mining and Energy Minister Radomir Naumov said that repeal of the law was necessary in order to allow the government’s oil monopoly to be reorganised.

According to Naumov, if the bill is adopted, Serbian Oil Industry will be transformed into two public companies, one for the transport of oil and oil derivates and one for gas. This is scheduled to happen by October 1.

A third company would be a joint stock company which would deal in exploration, production, refining and distribution of oil and oil derivatives and exploration and production of natural gas.

18 large enterprises to be offered at tenders

2005-07-21T11:41:00.000-07:00

Serbian Minister of Economy Predrag Bubalo spoke to Blic about the results of privatisation, state assistance to large industrial enterprises, RTB from Bor and Zastava from Kragujevac, and the announced acceleration of the privatisation process in Serbia. According to Serbian government’s official website the main excerpts from his interview are as follows:

Possibility of additional incentives or other assistance to large industrial enterprises:

- Large enterprises need assistance on a daily basis in order to survive because piled old debts have virtually immobilised them. The state is trying to provide maximum assistance to these companies – because they have a market value only if they are operational. If they have no money to procure energy or raw materials, or if their employees are on strike, they become heaps of scrap iron. The status of the so called large systems had not been decently addressed until last September, when we privatised some of them through restructuring. I believe, however, that recently adopted changes to the law will allow us to tackle this work more seriously. We will call tenders to privatise another 18 large enterprises.

How many jobs will be lost after their privatisation:

- I do not expect any dramatic lay offs because a majority of these enterprises applied their social welfare programmes already in 2002 and 2003. I am not trying to say that everything was resolved perfectly but the truth is that most of the problems were solved in an earlier period.

RTB Bor’s and Zastava’s prospects of finding strategic partners:

- RTB will be tested in the market by the end of the year. According to the Action Plan, a tender to sell the company should be called in December. The procedure to choose a privatisation is under way right now. All the company’s non-core businesses are being prepared for sell offs so that RTB Bor can focus on its core activity – copper mining and processing. Also, privatisations of 26 Zastava’s spin-offs are under way, including truck maker Zastava Kamioni. Some of them have already been sold, such as foundry Livnica in Topola and tool maker Alatnica in Kragujevac. We do not have an interested buyer at the moment for automobile unit Zastava Automobili but talks are under way on assembling Italian Fiat’s cars in the Kragujevac plant.

The fate of Zastava depends on repaying a €11.5 million debt to Fiat by the end of the year

- This debt must be repaid or else all plans will be ruined. If the debt of €11.5 million is not repaid by the end of the year, it will grow to €42 million and it will be impossible to repay. The money will be sought through the sale of Zastava’s assets.

Speeding up the privatisation:

- At present, 14 tenders are under way, eight of which have been called this year. During the first six months of 2005, we have offered 208 companies at auctions, and 119 have been sold off under an agreement with the IMF, which envisages the privatisation of 300 firms. At the stock exchange, the Share Fund has offered shares of 155 companies, selling stock in 120 of them. According to the agreement with the IMF, we are obliged to offer 20 companies for sale every month. I believe that it is in our best interest to end the agony of firms with socially-owned equity. It is realistic to expect that the privatisation process will experience a fresh acceleration although there are still some obstacles to that.

About the effects of the privatisation:

- In this year’s privatisations, auction sales alone have pushed revenues by €60 million above the expectations, and we have already reached the level of full 2004 by the sales of firms in the real sector. And I am convinced that privatised companies will fuel economic growth, because we need GDP to grow at least seven percent year in the next two years. After that period, growth can slow down and stabilise at just above five percent.

Generali to obtain controlling interest in Osiguranje

2005-07-21T11:39:00.000-07:00

Italy's Assicurazioni Generali signed a preliminary agreement to buy 50% plus one share in the Serbian insurance group Delta Osiguranje from the Delta group, the companies said in a joint statement. No financial details were given.

Delta Osiguranje that is the third largest insurance group in Serbia reached premium income in H1 over 16 mln euros is said in the statement.

Inflation level "critical"

2005-07-21T11:22:00.000-07:00

National Bank governor Radovan Jelasic said today that Serbia will have major problems if the annual inflation level passes the critical twenty per cent level, B92 reported.

“I don’t want to predict inflation for 2005 because the National Bank in Serbia has not yet targeted it. However I expect that in July it will be relatively high with a short-term monthly increase in prices, because of the necessary correction of the price of power and oil derivatives. In August I expect much less price rises,” he said.

“The price of energy will be used as an excuse by everyone. It is especially dangerous if local administrations behave in this way with the prices in their jurisdiction,” said the governor. He added that the National Bank is doing everything within its jurisdiction which is necessary to minimise the inflation rate.

Asked to comment on the exchange rate of the dinar by the end of the year, Jelasic said that making predictions was a thankless business. “Inflation is not the only influence on the exchange rate. There are many positive economic movements, there will certainly be foreign investments, but we will determine the exchange rate on the basis of monthly inflation,” he said.

Merino on promotion of Serbia's rating

2005-07-21T11:17:00.000-07:00

The promotion of the investment rating of Serbia to the BB-minus category is a specific success, while its further integration with European institutions will be a guarantee both for its further progress and its full reaffirmation in the region where it holds an important strategic position, United States (US) economist Beatrice Merino has said. Source: Tanjug

Labus opens new meat-processing plant in ‘Kolbis’ factory

2005-07-21T02:26:00.000-07:00

Serbian Deputy Prime Minister Miroljub Labus today opened in Novi Sad a new meat-processing plant in the ‘Kolbis’ factory, one of the 12 domestic slaughterhouses that received the Hazard Analysis Critical Control Points (HACCP) Certificate.

Labus pointed out that the factory ‘Kolbis’, whose owners are the Kobiljski family, has a certificate confirming that very high standards are being respected during the whole meat production process.

The Serbian Deputy Prime Minister stated that there are numerous meat manufacturers in Serbia that could obtain this certificate of quality. “I would like to take this opportunity and encourage them to send a request to the authorities, since the Serbian government covers 80 percent of the certificate’s cost, and the owner pays only one-fifth of the cost,” recommended Labus.

According to him, the five largest slaughterhouses in the country have applied for receiving export numbers, which would enable them to freely find a market for goods in EU countries.

Labus recalled that duties for meat export and manufactured products do not exist on EU territory, but that export is not possible without technical preconditions, and those are the HACCP Certificate and the export number. He pointed out that the Serbian government will provide assistance to manufacturers and added that it is then their duty to find their place on the market.

Exporters to receive international certificates of quality

2005-07-21T02:25:00.000-07:00

Serbian Minister of Agriculture, Forestry, and Water Management Ivana Dulic-Markovic and US Ambassador to Serbia-Montenegro Michael Polt promoted today the programme for improving the quality of food products in Serbia-Montenegro.

Today’s promotion was organised as part of the preparations for receiving international certificates for products to be exported from Serbia. The project, which is the result of the US government’s efforts to stimulate Serbian export, will comprise of professional assistance from the US Agency for International Development (USAID) for increasing the number of manufacturers from Serbia that will receive a Hazard Analysis Critical Control Points (HACCP) Certificate and the ISO 9001/14001 Certification.

In August, USAID will organise educational seminars in 13 regional chambers of commerce and agencies for developing small and medium-sized enterprises in Serbia. As part of this programme, representatives from 100 enterprises will attend training starting on September 1.

The project’s value, which the Ministry of Agriculture is financing, totals 180 million dinars, while USAID will support additional project activities with $300,000.

US Ambassador to Serbia-Montenegro Michael Polt stated at the press conference, held today at the Media Centre, that the US government intends to help as much as it can with this project in order to increase the number of products receiving clearance for export and so that the excellent food products of Serbia can return to the world market. The two types of clearance include standards for food safety (HAACP Certificate) and for quality (ISO 9001/14000 Certificate).

He recalled that only a small number of enterprises from Serbia have international certificates for export. He explained that the USAID Certificate HACCP is a preventive system that ensures the control of food safety in each step of the production process, and its possession increases the scale of international trade.

Polt stated that the cooperation between the ministries of agriculture of the USA and Serbia will also continue in the field of harmonisation of Serbian standards with international ones.

Dulic-Markovic expressed gratitude to the US Ambassador for the financial assistance of his country and recalled that the export of food products from Serbia last year reached $882 million.

According to her, in the first six months of this year, there has been a surplus in the export of food worth $150 million, while the value of export was more than $550 million.

Dulic-Markovic recalled that Serbia-Montenegro has preferential exports in the EU, USA and Russia, as well as agreements on free trade with surrounding countries, and said that we should make the best of these concessions.

She pointed out that the two ministries of agriculture are achieving great co-operation, and added that the US government is assisting Serbian agriculture through a large number of projects.

Serbian tourist bible ‘White Angel’ presented

2005-07-21T02:24:00.000-07:00

Serbian Minister of Trade, Tourism and Services Bojan Dimitrijevic presented today the Serbian tourist bible ‘White Angel’, in the Bonart Press Edition, which promotes the values of Serbia through its cultural, spiritual, and historical heritage.

Dimitrijevic said at the press conference that the specific features of Serbia, displayed in the book, should be integrated in the tourist brand, image and in the international position of Serbia.

He stated that the specific position of Serbia, on the border of two cultures and with two divided churches, is displayed on 500 pages. Special attention is given to the Islamic and Jewish heritage in Serbia and in this manner special emphasis is placed on Serbia’s multi-nationalism and multiculturalism.

The minister recalled that better representation in the world also means more investments, less political risks and better credits.

The editor-in-chief of Bonart Press Miso Vujovic said that the “White Angel’ is printed both in Serbian and English, and that it represents a guide through Serbian culture that surpasses the classical concept of a tourist guidebook.

He stated that Serbia could become a European tourist ‘brand’ because of Vinca, Lepenski Vir, Sirmium, Naisus, the monasteries of the Nemanjic dynasty, the Belgrade and Novi Sad fortresses, the Battle of Kosovo, Dusan’s Law Code and many other things.

The book contains colour photographs, it is printed on fine paper, and it will cost 1,500 dinars.

EU markets priority for Serbian abattoirs

2005-07-21T02:18:00.000-07:00

The markets of the European Union (EU) and neighboring countries are a priority for the sales of products of Serbian abattoirs, Deputy Minister for Agriculture Danilo Golubovic said on Wednesday, pointing out that these products could be exported to the United States as well in the future.

Italian consortium Stefani visits PIK Aleksinac

2005-07-21T02:15:00.000-07:00

Representatives of Italian consortium Stefani from Verona, who visited agricultural estate PIK Aleksinac, expressed readiness to invest some 3.5 million euros in the overhaul of the one-time giant.

Serbian government allocates € 4.5 million for Guca infrastructure

2005-07-20T10:49:00.000-07:00

Serbian Minister of Capital Investment Velimir Ilic visited Guca today as a representative of the Serbian government, which for the first time is sponsoring the ‘Dragacevo Assembly of Trumpet Players’. The minister used this opportunity to become acquainted with the preparations of this renowned festival and announce the government’s involvement in projects in the city.

Ilic said at the press conference that about € 4.5 million has been invested for infrastructure development. These funds, which have been allocated by the Serbian government, are being used for finishing the construction of two bridges on the Belica River, for city streets, the water supply system, and for the ‘Saboriste’, which is where the final competition of the trumpet players is being held.

Ilic stated today that the Serbian government is completely aware of the great importance of Guca and the ‘Dragacevo Assembly of Trumpet Players’ as an exceptional Serbian tourist destination.

The mayor of the Lucani municipality and President of the Organisational Committee of the ‘Dragacevo Assembly of Trumpet Players’ Slobodan Jolovic expressed gratitude to everyone who assisted Guca this year to host about half a million visitors during the seven days of the festival. He added that this year’s investments have exceeded three-times the amount of the municipality’s budget.

Gross salary reaches 25,503 dinars in June

2005-07-20T10:48:00.000-07:00

The Serbian Statistics Office said today that the average monthly salary in June 2005 stood at 25,503 dinars, up 4.31 percent in nominal terms and 3.58 percent in real terms against the previous month.

The average monthly salary in Serbia’s economy in June 2005 was 24,146 dinars, up 5.92 percent in nominal terms and 5.18 percent in real terms against the previous month.

In the non-economic sectors, the average June salary was 28,507 dinars, rising 1.34 percent in nominal terms and 0.64 percent in real terms month-on-month.

The statement went on to say that the average net salary in June was 17,441 dinars. Compared with the previous month, it grew 4.24 percent in nominal terms and 3.52 percent in real terms.

The average net salary in the economy in June was 16,533 dinars, up 5.89 percent in nominal terms and 5.15 percent in real terms compared with the previous month.

The average net salary paid in the non-economic sectors in June rose 1.21 percent in nominal terms and 0.51 percent in real terms month-on-month to 19,453 dinars, according to the statement.

Serbia-Montenegro, Czech Republic sign economic cooperation agreement

2005-07-20T10:47:00.000-07:00

Serbia-Montenegrin Minister of International Economic Relations Predrag Ivanovic and Czech Minister of Industry and Trade Milan Urban have signed an agreement on economic cooperation between the two countries.

The signatories said that this document, together with earlier agreements on the protection of investments and avoiding double taxation, will round off the legal framework for economic cooperation between Serbia-Montenegro and the Czech Republic.

Ivanovic said following the signing ceremony that Serbia-Montenegro must seek to sell more goods in the Czech market in order to close the gap in trade with the central European country.

He also said that Serbia-Montenegro must develop the small and medium sized sector in order to improve competitiveness of its products in the Czech Republic’s market.

The delegation of the Serbia-Montenegrin Ministry of International Economic Relations will also meet today with representatives of Czech agencies supporting trade and foreign investment and with officials of the Ministry of Local Development to discuss cooperation in the tourism industry.

Serbia, China could cooperate on power transmission line production

2005-07-20T03:28:00.000-07:00

Serbia could cooperate with China in the electrical machine-building sector, notably the production of equipment for power-transmission line and automated processing machinery building, the Serbian Chamber of Commerce's (PKS) Metal and Electric Power Industry Association President Milorad Markovic said on Tuesday.

Serbia Key Economic Indicators

2005-07-19T21:37:00.000-07:00

Serbia Key Economic Indicators

		2000	2001	2002	2003	2004	I-III 2005
Gross domestic product	yoy¹ %	5,2	5,1	4,5	2,4	8,6²
Gross domestic product, bill. din	c. price	355,2	708,4	919,2	1095,4
Gross domestic product per cap in USD		1071,0	1256,3	1459,5	2001,4
Economic activity
Industrial production	yoy %	11,4	0,1	1,7	-3,0	7,1	-2,3
Productivity in industry	yoy %				3,9	15,3	-3,0
Unit Labor costs	yoy %				3,9	-6,6	5,4
Turnover in retail trade	yoy %	9,3	19,8	23,9	10,0	17,9	32,6
Construction	yoy %	16,8	-14,3	-7,4	30,9	5,2	-18,1
Transportation	yoy %	38,9	9,6	6,9	5,2	4,9	-4,0
Postal activity and telecommunications	yoy %	38,2	20,9	3,1	31,3	26,7	30,6
Number of tourist overnight stays	yoy %	41,0	-6,5	0,16	-7,0	-1,0	-4,0
Labor market and pensions
Unemployment	%	25,6	26,8	29,0	31,7	31,5	32,6
Employment	yoy %	-2,6	0,2	-1,7	-1,2	0,5	0,2
Net earnings	yoy %	6	16	30	14	10,1	3,8
Average pension	yoy %	7,4	19,3	59,4	9,0	5,7	2,1³
International transactions
Commodity export	m. USD	1558	1721	2075	2754,8	3701,0	1755,9
Commodity import	m. USD	3330	4261	5614	7472,5	11139,2	3738,6
Trade balance	m. USD	-1772	-2540	-3539	-4717,7	-7438,2	-1982,7
Balance of payments	m. USD	227	491	1111	1270	694	397
Direct investment (net)	m. USD	50	165	475	1360	966	417
Prices
Retail prices	yoy %	70,0	91,8	19,5	11,7	10,1	17,1⁴
Costs of living	yoy %	79,6	93,3	16,6	9,9	11,4	16,3⁴
Industrial producer prices	yoy %	102,6	87,7	8,8	4,6	9,1	13,5
Agricultural producer prices	yoy %	155,3	71,2	1,1	0,5	10,0	5,5³
Monetary and financial indicators
Discount rate	% p.a.	26,34	16,43	9,50	9,0	8,5	8,5
Short-term credit	%p.a.	78,70	34,51	19,71	15,48	15,53	15,34³
Long-term credit	%p.a.	27,81	9,32	12,43	10,87	9,86	11,38³
M3	yoy %	161,4	92,3	52,7	27,9	31,9	35,1³
Loans to private households	yoy %	260,3	505,9	119,3	49,5	53,9	57,6³
Total turnover at Belgrade Stock Exchange	yoy %	44,9	461,9	104,0	-9,0	-56,4	2,7⁴
Value of EUR against DIN	value	58,68	59,71	61,52	68,31	78,89	82,78⁴
Value of US$ against DIN	value	63,17	67,67	58,98	54,64	57,94	68,65⁴
Real effective exchange rate⁵	%		30,0	16,8	1,9	-1,1	-1,9⁴
Privatization proceeds	m EUR	-	-	340,5	929,4	187,8	10,5

¹ growth rate yoy (peroid current year/period previous year)

² estimate RDB

³ I-IV 2005

⁴ I-VI 2005

⁵ growth rate end-of-period

⁶ state at the end-of-period

Source: Republic of Serbia Republic Development Bureau

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2005-07-19T05:37:00.000-07:00

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Budget revision debate finished

2005-07-19T04:33:00.000-07:00

The Serbian Parliament has finished main debate on the proposed revision to this year’s budget and amendments to the Budget Systems Act, B92 reported.

During yesterday’s sitting devoted to the revision, Finance Minister Mladjan Dinkic again said that subsidies to loss-making public companies would be completely cut by the end of 2007, because this was the deadline for privatisation of such firms.

Economics expert Dana Popovic, speaking to B92, described the move as a responsible step by a serious government: “We didn’t elect a government to please us nor as café singers who we will applaud and smile at, but as people who would take responsibility for the fate of the country, just as you don’t go to a surgeon to hear that you’re fine but for what you need to be cured. So this time, it’s finally happened that something has really changed, and not just words,” says Popovic.

Popovic, who teaches at the Economics Faculty of Belgrade University, says that employees in insolvent companies have long known that there is no future in these companies. “Most of these employees don’t get any kind of salary from these companies and work somewhere else. So if the real situation is they have some work which was previously on the black market, now we can say to them that this can’t happen any longer, I really don’t see what the problem is. The problem is that we are no longer lying,” Popovic added.

Dinkic claims that the budget revision will cut subsidies to non-productive by 6.5 billion dinars (about 78 million euros).

The parliament will today review candidates for posts in the judiciary, judges and prosecutors, who have been nominated by the High Judiciary Council.

Standard and Poor's raises Serbia debt rating to BB-

2005-07-19T04:16:00.000-07:00

Standard & Poor's on Monday raised Serbia's sovereign debt rating saying the country's prospects had improved both financially and politically, Serian media reported.

S&P boosted Serbia's long-term sovereign credit rating to BB minus from B plus, while affirming its B short-term rating. Both ratings have a stable outlook.

- The upgrade reflects Serbia's improved medium-term fiscal outlook, its diminishing political risks, and improved external indebtedness indicators," the S&P wrote in a statement.

An improved fiscal picture should help the country contain inflationary pressures, said Standard and Poor's.

More trouble at JAT

2005-07-18T05:46:00.000-07:00

Serbia’s state airline, JAT Airways, is again at the centre of a row between the parties of the governing coalition, B92 reported.

Capital Investments Minister Velimir Ilic sparked the row with a statement seeking the sacking of the company’s Management Board because it has failed to act on a government directive to split off the Technical Services division into a separate company. Meanwhile, board chairman Milos Aligrudic, an MP in Vojislav Kostunica’s Democratic Party of Serbia, has accused Ilic’s assistant, Milan Mokovic of a clash of interests in the matter and of inciting strikes in JAT.

B92 spoke to Aviation Mechanics Union representative Dragan Bogdanovic, who confirms that nothing has been done about separating Technical Services which, he says, has only one employee, its director.

“We’re being careful not to be separated, so that we’re not blamed for something which we don’t deserve. We’ve only one employee in technical services, but the final deadline was July 1 this year. One employee, the account is not working, we have half a million dollars working on other aircraft. We haven’t got even a single dollar from that. The German aviation authorities came and certified us. We can’t pay the basic costs involved. Who’s responsible? Mr Mokovic, who has forced us to strike and Mr Ilic who is trying to resolve the problem or the JAT board which does not let us have what we deserve.

“So we’re only asking to be allowed to work. We will be a state brand and we will put the company on the world market. Just don’t fight over our backs and let us work,” said Bogdanovic.

Inflation will not exceed last year’s rate

2005-07-18T05:28:00.000-07:00

Serbian Minister of Finance Mladjan Dinkic has said that there is no fear that this year’s inflation will exceed last year’s 13.8 percent.

Explaining the proposed budget revision in the parliament today, Dinkic said that the fact that inflation will be a few percent higher than projected will not disturb the macroeconomic policy.

He said that Serbia needs a budget surplus this year in order to cut the tax on salaries next year and start paying pension arrears through bond issue.

Dinkic announced that the parliament will discuss a bill in August envisioning a conversion of unpaid pensions into public debt and the issuing of bonds as of January 15, 2006.

According to him, the state owes approximately 1.5 monthly pension checks, or some 20 billion dinars, which will be repaid through bonds over the next three years. He also recalled that 22 pensions owed to retired farmers will be paid over the next five years.

The proposal of a revised budget includes a 32 billion dinar surplus, with projected revenues revised upwards by 9.3 percent to 433 billion dinars.

The budget outlays will be reduced to 416.6 billion dinars, from the originally planned 401 billion dinars. At the end of the year the state coffers will have a surplus of 32 billion dinars, although the original 2005 budget projected a deficit of 20.5 billion dinars.

Most of the surplus, some 23.5 billion dinars, will be spent on the repayment of public debt, while 5.5 billion dinars will go towards programmes to encourage exports, employment, and home lending.

At the ongoing session, which began on Friday evening, the parliament is also debating changes to the Law on the budget system, appointments and dismissals of judges and prosecutors, changes to financial plans for health and pension insurance, and the election of members to parliamentary committees.

Company “Agrounija” from Indjija sold

2005-07-16T10:40:00.001-07:00

The Serbian Privatisation Agency said that on July 12, it reached an agreement with “MK Commerce” from Novi Sad on the sale of 70 percent of socially-owned company “Agrounija” from Indjija.

In a statement, the Agency said the selling price is €2.5 million, the investment programme is worth €5.09 million, and the buyer has unconditionally accepted both the minimal commitments within the social programme and the additional ones.

Two offers were made on a public tender for PIK “Agrounija”, announced on December 31, 2004, - one by “MK Commerce” from Novi Sad, the other by a consortium made up of Belgrade companies “Univerzal Holding”, “Mancoop Agrar”, and “Soko Group”, the statement continues.

At its second session, the tender commission declared “MK Commerce” the first ranked bidder, the statement concludes.

Contract of sale of Putnik from Belgrade cancelled

2005-07-16T10:40:00.000-07:00

The Serbian Privatisation Agency stated today that the contract of sale of the socially-owned company Putnik from Belgrade was cancelled.

The buyer, Uniworld Holdings Ltd, registered in California, has not submitted the second guarantee of $7.3 million within the additional deadline set by the sales contact.

By signing the contract, the buyer assumed precisely defined obligations, the disrespect of which entails consequences that might lead to the canceling of the contract. Therefore, due to the unfulfilled obligations, the Contract on the sale of socially-owned capital of the Putnik company through public tender was declared null and void, the Privatisation Agency said in the statement.

The statement concludes that the company’s capital will be transferred to the Serbian Share Fund, which will appoint a provisional director to the company.

Parivodic, Polt visit frozen-fruit factory in Azanja

2005-07-16T10:37:00.000-07:00

erbian Minister of International Economic Relations Milan Parivodic and US Ambassador to Serbia-Montenegro Michael Polt visited today Azanja-based processor of frozen fruit Atle, which exports its products to Western markets.

Parivodic recalled that this factory, thanks to US trade benefits just approved to Serbia-Montenegro, will be able to export raspberries to the US market free of customs duties, which used to be 11.2 percent.

He said that the US’s decision to grant trade preferences to Serbia-Montenegro is great news for Serbia because it will be able to export all the country’s finished goods and a large number of semi-finished products to the US free of import tariffs.

Parivodic expressed the hope that there will be more and more successful firms like Atle in Serbia and that they will export their products directly to foreign markets rather than through intermediaries who make money on these transactions.

Last year, Atle exported a total of 600 tonnes of blackberries and raspberries to Western Europe and the US and it has recently agreed deals with two more customers from the US and Canada.

NIS needs modernisation, strategic partner

2005-07-16T10:36:00.000-07:00

Serbian Minister of Energy and Mining Radomir Naumov said today that the state oil and gas company NIS should be modernised first in order to increase its value and that the next step should be to attract foreign capital by locating a strategic partner.

Following the opening of a modernised gas station in Stari Banovci on the Belgrade-Novi Sad highway, Naumov said that a strategic partner could help to reorganise the company, modernise production, and improve communication between sectors in the oil industry.

He explained that this plan must be realised through privatisation of joint ventures, under the supervision of the Ministry of Energy and Mining and with the assistance of privatisation advisers.

Naumov announced that a tender to choose a privatisation adviser will be called soon and that an adviser will be required to propose ways to attract foreign capital.

Naumov recalled that the government has approved the establishment of three companies that will be set up after the restructuring of NIS.

These companies are NIS, which will handle oil and gas production and exploitation, Transnafta, which will transport oil and oil derivatives, and Srbija-Gas, which will process, distribute, and transport natural gas.

Works on railway station Prokop to begin in late September

2005-07-16T10:35:00.000-07:00

Serbian Minister of Capital Investment Velimir Ilic stated that the domestic economy lacks more than 2,000 freight cars and a number of passenger carriages, and said that if the projects falling under the ‘Railways of Serbia’ programme are completed within the set deadline, prospects for better results in this enterprise are guaranteed, Serbian Government published

Ilic stated at the ‘Railways of Serbia’ Media Centre that there has been an international call for bids for the Belgrade railway station centre in Prokop, for which more than 13 worldwide companies have answered, wanting to invest more than €200 million in the project.

The realisation of this project is expected to begin in late September, and the Ministry of Capital Investment has allocated certain funds for the preparatory works, stated Ilic. He added that the job has been given to Belgrade-based engineering firm Energoprojekt.

Ilic said that despite subsidy reductions, the rail industry has remained one of the country’s driving economic forces towards progress, and added that the Serbian government will be prepared to support and increase the financial assistance needed for restructuring.

Ilic also confirmed that the bridge at Ostruznica will be put into service by the end of August.

Government approves Telecommunications Agency’s statute

2005-07-16T10:33:00.000-07:00

Serbian Minister of Capital Investment Velimir Ilic has said that the government gave its consent today to the Statute of the Telecommunications Agency, which will enable the regulator to start work as early as August and bring order in the telecommunications market, Serbian Government reported.

Ilic told a press conference following yesterday’s government session that the government has managed to create conditions for the agency to operate as an independent regulator and he pointed out that all the members of the agency are non-partisan.

Ilic also voiced hope that the agency will audit all the broadcasting licenses issued over the past few years given that numerous irregularities have been detected in that process.

Also, given the large number of foreign flights through Serbia’s airspace, the government could consider a possibility of setting aside a portion of receipts from charges for the use of Serbia’s airspace to modernise the hail protection system.

Minister of Agriculture, Forestry, and Water Management Ivana Dulic-Markovic said that the government adopted the decree on subsidising the production and the storing of wheat harvested in 2005 and a decree amending the decree on the programme of measures to encourage agricultural production development in 2005.

She said that the government endorsed the ministry’s proposal to limit the support to wheat farmers in 2005 to those who are registered in the national farm register as individuals.

According to the decree, a registered farmer will be entitled to receive 5,000 dinars per hectare of wheat sowed.

Also, those who are in the business of storing wheat are entitled to a subsidy of 750 dinars per tonne as well as to a short-term loan of 12,000 dinars per hectare for financing the autumn sowing season.

Novosadska Banka sold to Erste

2005-07-16T10:25:00.000-07:00

Serbian Minister of Finance Mladjan Dinkic said today that Austrian Erste Bank, which signed a €73 million contract today to acquire 83.3 percent of Novosadska Banka, had offered the highest price and the best social welfare and investment programmes in the tender for Novosadska.

Dinkic said that the offered price was 3.3 percent higher than the value of Novosadska’s capital and he added that this contract is one of the best bank privatisation deals in Serbia as well as in Central and Eastern Europe.

According to him, the arrival of Austria’s largest private bank, which holds a 25 percent market share there, is a result of an excellent transaction that the state had made with its stake in Novosadska.

Dinkic said that the new owner of Novosadska has agreed to buy out the remaining 16.7 percent of the bank’s equity from small shareholders within 90 days’ time and at the same per share price that it is paying for the state’s stake.

He expressed the hope, however, that this process will be finished in the next two or three weeks.

Dinkic added that in the deal with Erste Bank, they are obligated to approve €15 million in five-year loans to small and medium sized enterprises with interest rates two percentage points lower than the current interest rate on SME development loans.

According to him, Erste Bank has also committed itself to disbursing €2 million in various donations over the next five years and to investing a further €10 million in short-term loans to Novosadska’s major corporate clients.

Dinkic also recalled that the state paid a total of €183 million for debt-for-equity swaps in three banks including Novosadska and that it later earned €275 million from their privatisations, thus posting a total gain of nearly €90 million.

Erste Board Chairman Andreas Treichl said following the signing ceremony that this is “one of the most professional” deals the Austrian bank has ever concluded in Central and Eastern Europe and he added that Erste has ambitious plans in the Serbian market in both retail and corporate lending.

Of a total of 41 serbian banks, 15 are in foreign hands - four Austrian, four Greek, two French, two Slovenian, two Italian and one German.

Serbian economy lacks more than 2,000 freight wagons

2005-07-16T09:30:00.000-07:00

The Serbian economy lacks more than 2,000 freight wagons and a number of passenger cars and if the Serbian Railways projects are realised within the set deadline, this company will have a chance to improve its results, Serbian Minister of Capital Investments Velimir Ilic said on Friday.

NBS Governor on Inflation and Agreement with the IMF

2005-07-12T15:23:00.001-07:00

Belgrade, July 8, 2005
(Press Release from Governor’s Cabinet)

The National Bank of Serbia is surprised at the latest statement of the IMF Mission Chief for Serbia and Montenegro that domestic inflation is likely to reach 16 percent by the end of the year. The basis for such high estimate is unclear as only two weeks ago, when approving the last credit tranche following the positive assessment of the fifth review of the current financial arrangement, the IMF Board of Executive Directors assessed that the end-2005 inflation figure will be significantly lower at 11 to 12 percent, Radovan Jelašić, Governor of the National Bank of Serbia, commented on this unexpected turn of events.

-Nothing out of ordinary has happened in the past fortnight that would provoke such drastic change in the Fund’s estimates. I also believe that such “futile” bidding with inflation levels is neither good nor desirable, especially in the run-up to the parliamentary discussion on the impending revision of the budget which should be reflective of a fiscal policy that results in a surplus rather than deficit in the Serbian state budget. Also, already in May, the National Bank of Serbia took significant measures much stricter than those agreed with the Fund, but this did not bring forth the desired results, which only goes to confirm that in the implementation of the reconciled economic programme the government should not only be guided by what the International Monetary Fund says, but should in certain cases do much more, Mr. Jelašić pointed out.

-Those who adjust their estimates of deviation from target inflation by as much 50 percent in only two to three weeks bring into question the validity of their own estimates and the efficiency of their work on reaching the agreement on reconciled economic policy with the International Monetary Fund. Saying in advance what inflation in Serbia will be by the end of 2005 suggests that economic policy will not be successful as well as fuelling inflationary expectations, the Governor believes. Mr. Jelašić also reminded that no significant impact on inflationary pressures is possible in the space of two weeks, but that inflationary expectations can successfully be fuelled in the same short period.

The National Bank of Serbia believes that, instead of putting forward similar estimates that can only have negative ramifications and feed inflationary psychology, it would be desirable that the Monetary Fund should help with concrete suggestions as to what should be done in order to minimize the deviation from the projected inflation this year, in addition to reducing the trade deficit. The National Bank of Serbia stands firm in its commitment to implementing an economic policy that would result in the accomplishment of these two key objectives, as has been repeatedly evidenced by the measures it has taken and which have been far stricter than those envisaged in the programme agreed with the International Monetary Fund, Mr. Jelašić pointed out.

Remaining Deposits of the National Bank of the Former SFRY Distributed

2005-07-12T15:23:00.000-07:00

Further to the agreement on the distribution of the remaining deposits of the National Bank of the former SFRY in non-American commercial banks, confirmed last week by the Decision adopted by the Committee for the Distribution of Assets and Liabilities of the Former SFRY in Ljubljana, our country was allocated 38% of approximately USD 220 million in remaining foreign exchange reserves in line with the Succession Agreement. This amounts to around USD 83 million, Veroljub Dugalić, authorized negotiator for SCG, said in today’s press conference in the National Bank of Serbia.

According to Mr. Dugalic, financial assets and debts of the National Bank of the Former SFRY have hereby been almost entirely distributed, whereas this part of the Succession Agreement is expected to be fully and successfully completed in the Belgrade meeting of the above committee.

Particular significance of this agreement lies in the adoption of the resolution on regulating unclosed guarantees, as the Military Department which formed part of the then central bank was the guarantor for the work performed and contracted in the 80s, mostly in third world countries, by the companies from the then common state. Potential liabilities in that respect amount to around USD 330 million, approximately one half whereof is accounted for by SCG companies, as the agreement in Ljubljana specified that potential liabilities will in their entirety be assumed by the companies of each successor state to which such liabilities refer, that is, by contractors of the work performed via the former Monetary Department and SDPR.

In that manner, the rights in the distribution of the remaining foreign exchange reserves have been linked to the above potential liabilities, which safeguards the National Bank of Serbia against charges in respect of these guarantees, Mr. Dugalić explained. The very fact that individual companies are specified as debtors of record removes the danger that the National Bank of Serbia should be deemed legal successor to the Monetary Department or have legal disputes instituted in its respect for the full amount of the issued guarantees, Ana Gligorijević, Vice-Governor of the National Bank of Serbia emphasized.

Mr. Dugalić also explained that not all guaranteed liabilities of the companies from SCG and Serbia would in effect be claimed as, due to sanctions, many of these transactions were not completed or the contracts were unilaterally terminated, but that talks on this issue in each particular case have hereby been enabled.

Inflation and NBS Bill's Interest Rates

2005-07-12T15:21:00.000-07:00

According to the Republic Statistical Office data, retail prices rose by 0.8% in June 2005 relative to the preceding month. In the first six months this year, retail prices went up by 8.0% or by a monthly average of 1.29%. Such price growth resulted partly from the introduction of the value added tax in 2005 (one-off growth), and the seasonal hike in prices of early fruit and vegetables, rise in world market oil prices and increased effective demand in the domestic market, and it exceeded the growth projected for the first half of this year. For that reason, additional monetary policy measures were taken in order to subdue inflationary expectations in the oncoming months of 2005.

Commodity prices went up 0.8% in June, whereas prices of services recorded a 1.0% rise. Viewed separately, the strongest contributors to inflation rate were intercity passenger transport and ground coffee, with 0.14 and 0.12 percentage points, respectively. Agricultural products recorded unusually strong growth of 3%, although their contribution to the inflation rate was lower than in the preceding months amounting to 0.12 percentage points. Within administered prices, in addition to intercity transport, prices of bread, cigarettes, coal, medicines, water and utilities, and petroleum products also rose, while no significant movements were perceived in other administered prices. Hence, core inflation in June exceeded overall inflation amounting to 1.1% relative to the preceding month.

In order to dampen inflationary pressures resulting partly from the increase in approved private and mixed sector (banks etc.) external borrowing, the National Bank of Serbia raised foreign exchange reserve requirement rate which, with effect as of June 10, amounts to 26% in lieu of the previous 21%. On the other hand, dinar reserve requirement rate was cut from 21% to 20%. It was also decided to abolish the requirement of the National Bank of Serbia to pay interest on banks’ allocated foreign exchange reserves (which does not refer to household foreign exchange savings).

In addition to increasing the average reserve requirement rate, the National Bank will continue to sterilize excess liquidity through open market operations, that is, through its repo interest rate policy. According to the data of the National bank of Serbia, in 42nd to 63rd auction of long-term RS government bonds in June and early July 2005 interest rates on repo transactions ranged from 13.45% to 16.88% annually, depending on the maturity. Interest rate on repo transactions in the 63rd auction (held on July 5 this year) amounted to 15.00% annually for 28-day transaction maturity. The CSD 1.8 billion stock of issued securities in the 63rd auction was entirely realized.

Auto parts manufacturers set up Serbia’s first business cluster

2005-07-12T14:13:00.000-07:00

Serbian Minister of Economy Predrag Bubalo said at the founding session of Serbia’s first business cluster today that the creation of clusters in various industries will help better organise the work, raise the quality of products, and boost output.

Bubalo said that the fact that Serbia’s first business cluster has been established in the auto industry is of great significance given that this industry is set to post the sharpest growth in exports in the coming years.

He recalled that the creation of the first cluster was assisted by Austrian and German auto manufacturers and institutions and organisations, which is very important given that Germany is one the biggest car manufacturers in the world.

According to him, the setting up of five more clusters in Serbia is in preparation.

German Ambassador in Belgrade Andreas Zobel said that great challenges are ahead for Serbia’s auto industry and that the country must regain lost partners in order to revive the industry.

According to him, the aim of this cluster is to help domestic manufacturers of auto parts and equipment get organised and attract attention of foreign partners.

Zobel said that the setting up of this cluster is proof that Serbia has ideas and motivation and that science, politics, and economy can be gathered around one idea.

Germany is not only Serbia’s key trade partner but also one of the major aid donors, and has assisted Serbia with a total of €400 million since October 2000, Zobel recalled and added that Germany also accounts for one quarter of the EU’s total aid to Serbia.

Serbia-Montenegrin, Moroccan businesspeople should step up contacts

2005-07-12T14:10:00.000-07:00

Serbian Prime Minister Vojislav Kostunica met today with Moroccan Minister of Foreign Trade Mustapha Mechahouri. The two officials agreed that the relations between Serbia-Montenegro and Morocco are very good and that there are possibilities to improve economic cooperation, Serbian Government published.

Kostunica and Mechahouri pointed out that today’s signing of a trade agreement opens possibilities for greater cooperation and they agreed that it is necessary to improve contacts between businesspeople and companies in the two countries.

The talks also covered the situation in Kosovo-Metohija, and Kostunica pointed out that all the issues should be resolved through dialogue and compromise, with the preservation of the sovereignty and territorial integrity of the state union of Serbia and Montenegro.

Mechahouri stressed that Morocco stands for the full abidance of UN Security Council Resolution 1244 and he expressed full support to the preservation of Serbia-Montenegro’s sovereignty and territorial integrity.

EC proposes mandate for negotiations on a Stabilisation and Association Agreement

2005-07-12T05:28:00.000-07:00

The European Commission has put forward to the Council a mandate for negotiations with Serbia and Montenegro on a Stabilisation and Association Agreement (SAA). The agreement’s main goal is to promote economic and trade relations, with the perspective of establishing free trade areas and also to regulate the movement of workers, freedom of establishment, supply of services and movement of capital.

The Commission adopted a Feasibility Study on 12 April 2005 which assessed that Serbia and Montenegro is ready to negotiate a Stabilisation and Association Agreement. Following the Council’s acceptance of this recommendation on 25 April 2005, the Commission has adopted a draft negotiating mandate and put it forward to the Council for approval.

The aim of the negotiations is to conclude the first comprehensive agreement between the EU and Serbia and Montenegro. This preferential agreement will provide for wide-ranging co-operation to foster the integration of the country into EU programmes and structures.

The proposed negotiating directives include the establishment of a formalised framework for political dialogue with Serbia and Montenegro, both at bilateral and regional level. The agreement’s main goal is to promote economic and trade relations, with the perspective of establishing WTO-compatible free trade areas after a transitional period. The agreement will also regulate the movement of workers, freedom of establishment, supply of services and movement of capital. It will include a commitment by Serbia and Montenegro to progressive harmonisation of its legislation with that of the EC (notably in key areas of the internal market). It will also provide a basis for co-operation in other fields.

Once the Council has approved the mandate, the Commission will open SAA negotiations as soon as possible. However, the progress of Serbia and Montenegro in the negotiations will depend on how quickly the country is able to build the capacity to implement the provisions of the agreement. Moreover, the negotiations can be suspended if Serbia and Montenegro’s progress towards fulfilling key conditions stalls – most notably progress towards achieving full cooperation with the International Criminal Tribunal in The Hague.

Background:

The Stabilisation and Association Process (SAP) is the EU’s policy for the countries of the Western Balkans region. The Stabilisation and Association Agreement is the final stage of that policy, creating a contractual relationship between a country and the European Union. The Feasibility Study is an evaluation report that establishes whether a country is able to negotiate an SAA. The SAP is accompanied by a generous financial assistance programme, called Community Assistance for Reconstruction, Development and Stabilisation (CARDS).

The EU has already signed Stabilisation and Association Agreements with the former Yugoslav Republic of Macedonia and Croatia, and is currently negotiating an SAA with Albania.

No interest for Prva Petoletka

2005-07-12T05:18:00.000-07:00

The Serbian Privatisation Agency has said that a commission in charge of selling 70 percent of the socially owned capital of Prva Petoletka, the Trstenik-based manufacturer of hydraulic and pneumatic components and systems and its subsidiaries has declared the tender unsuccessful.

At the first meeting, on July 7, the tender commission established that no bid has been submitted by the June 30 deadline and it therefore decided to declare the tender unsuccessful, according to the statement.

Japan makes donation for Belgrade water-supply enhancement

2005-07-12T05:14:00.000-07:00

Serbia-Montenegrin Minister of International Economic Relations Predrag Ivanovic and Japanese Ambassador to Serbia-Montenegro Ryuichi Tanabe signed a document today on a Japanese donation worth $6.7 million for the modernisation of the water-supply in Belgrade.

Ambassador Tanabe afterwards stated that the quality of water is of essential importance for the life and health of all citizens and added that Japan has already provided professional equipment and sent four experts, given the importance of technology transfer.

According to him, the project should resolve the water supply problems in some parts of the city, enhance the water supply system’s capacity, and ensure the supervision of the quality of water.

Tanabe reiterated the Japanese government’s readiness to continue to support the modernisation of Belgrade’s water supply system in the coming years.

Ivanovic recalled that the Japanese government has so far donated a total of $190 million for Serbia’s environmental protection, infrastructure, health, and social protection as well as buses for Belgrade’s urban transport. Japan also donated equipment to four clinical centres in Serbia and to the hydroelectric power plant in Bajina Basta.

First prospectuses of public-sector companies designated for auctioning

2005-07-09T23:29:00.000-07:00

The Serbian Privatisation Agency, in Saturday's edition of the daily Politika, published the first prospectuses of public-sector companies with a majority of state equity, which are now designated for auction.

The announcement comprises prospectuses of five companies designated for auction, which are part of the socially-owned Serbian power utility “Elektroprivreda Srbije” – “Betonjerka” from Aleksinac, “Elektroizgradnja” from Bajina Basta, “Djerdap usluge” from Kladovo, “Sava-Tent” from Obrenovac, and “Energosoft” from Novi Sad.

For the first time, prospectuses for two media companies were published, and these are “Pancevac” from Pancevo and “Vrsacka Kula” from Vrsac.

The statement points out that, as the initiatives for privatisation arrive along with the necessary information from companies to be auctioned, the Agency will continue to publish prospectuses for public-sector companies.

The Agency also announced in Politika a public sale of a part of the “Dunav osiguranje” company, namely the “Jugoslavija” hotel in Belgrade. The auction will take place on July 28 at 11 am at the Privatisation Agency’s premises, and the initial bidding price will be €38,134,800.

Fast privatisation necessary for economic development

2005-07-09T23:27:00.000-07:00

Serbian Minister of International Economic Relations Milan Parivodic stated that a fast privatisation, which would include good strategic investors, is necessary for the economic development of Belgrade, and the whole of Serbia.

Parivodic stated, addressing the businessmen at the meeting of the Belgrade Chamber of Commerce board of directors, that good strategic partners will modernise technology, induce production, employ more in the work force, and that these strategic partners will improve living conditions.

Speaking about the industry development climate of Belgrade and Serbia, he stated that the Ministry of International Economic Relations has drawn a Draft Law on Foreign Trade Transactions, which was approved by the Serbian government, and whose implementation will bring businessmen certain benefits.

According to him, this law envisages the freedom of transfer of ownership of dutied goods, the freedom of investment, some safety measures and less licensing.

With the aim of attracting investors, the question of ownership relations should be solved, and fees for the use of construction land should be decreased, which, when compared to neighbouring countries is high, stated Parivodic. He added that the price of a square metre of land in Belgrade’s first zone is €450, whereas the price in Prague is €200, and in Ljubljana €100.

He stated that all the construction land that is not state-owned must be privatised, which will contribute the attracting of foreign investors who will buy this land, and have a clear ownership status.

Recalling that Serbia has a problem with its courts, Parivodic stated that the Ministry of International Relations has drawn up the Draft Law on Arbitration, which envisages the existence of arbitration courts in Belgrade, Kragujevac, and Nis. The process of solving the property status will therefore be more efficient and will no longer last three years.

Government adopts proposed 2005 budget revision

2005-07-09T23:14:00.000-07:00

The Serbian government adopted at its session a bill on changes and amendments to the Law on Serbia’s 2005 Budget, and a bill on changes and amendments to the Law on Budgetary System.

The government also adopted a bill on foreign exchange transactions, a bill on veterinary medicine, a bill on changes and amendments to the Law on Broadcasting, and a bill on the abolition of the Law on the Founding of the Socially-owned Enterprise for Research, Production, Processing and Circulation of Oil and Natural Gas.

The government adopted a Decree on the manner and conditions of settling company debts towards shareholders with the money made by selling the shares of a company owned by the Serbian Share Fund.

Road-toll for domestic vehicles increases on EU demand

2005-07-09T23:08:00.000-07:00

Serbian Minister of Capital Investment Velimir Ilic said that the Serbian government has decided to increase the road-toll on domestic vehicles by 63 percent due to the EU demand to bring the road-toll on domestic vehicles in line with what is charged to foreign vehicles.

At a press conference, Ilic explained that the EU wants to level the road-toll because of the high-set criteria and standards for maintaining international corridors. The country’s road maintenance services will thus have more funds and will be able to comply with EU demands that road repair be funded domestically.

He said that the government will also decide on further increase in road-toll for domestic vehicles, adding that the levelling of the road-toll might not be accomplished by increasing the one on domestic vehicles, but by reducing the one on foreign vehicles. This will depend on whether the tax on vehicle registration is increased and whether the excise tax on petrol goes to the road industry.

Ilic said the new road-toll is high in relation to the standard in Serbia, and yet low compared to neighbouring countries, in which five to six cents are charged per kilometre, whereas in Serbia it is five cents for foreign, and 2.9 cents for domestic vehicles.

After the increase, tollgates have recorded a rise in income as well as a 15 percent fall in domestic vehicle circulation. Simultaneously, circulation of foreign vehicles has risen by 110 percent, he added.

Ilic recalled that in 2004, approximately 80 kilometres of road were “rehabilitated” in Serbia, adding that maintenance of one kilometre costs $600 in Serbia and $30,000 in Europe.

Ilic announced that the Serbian government’s debt of 8.5 billion dinars to road services will be paid off by late August, and that a new bill on roads, which will enable extra funds for the road industry, should be adopted next year.

Banking reform and restructuring pays off

2005-07-08T01:32:00.000-07:00

Banking reform and restructuring in Serbia may have pushed profitability down, but as the banking sector restructuring is coming to an end, the sector’s financial fundamentals are set to improve markedly, says NBG in its last special report covering country’s Banking system. However net operating income growth should moderate this year, as the credit to private sector will slow, following the authorities’ recent administrative measures aimed at curbing domestic demand growth. On the other hand Foreign presence is set to increase.

After several years of steady progress, the macroeconomic performance was mixed in 2004. Real GDP growth posted a record high of 7.5 per cent and the fiscal deficit overperformed its target, reaching 1.6 per cent of GDP. However, despite a tight policy mix, inflation returned to two-digit levels (13.7 per cent) and the current account deficit surged to 14.8 per cent of GDP.

The loss of competitiveness has led to a shift in exchange rate policy to a crawl, somewhat faster than the pace of inflation. In this high growth environment, lending activity soared, especially in the profitable retail segment. However, the banking system experienced net losses due mainly to large loan loss provisions, stemming from high levels of non-performing loans, mostly dating back to the old regime.

Financial intermediation improved considerably in 2004, reflecting, inter alia, stronger confidence in the banking system and robust economic activity. In fact, credit to the private sector grew by 56.9 per cent y-o-y, bringing the credit to the private sector-to-GDP ratio to 19.2 per cent from 14.5 per cent in 2003, below the SEE average of 19.6 per cent. More importantly, lending to households registered the highest growth rate (125.6 per cent y-o-y), yet stood at only 4.6 per cent of GDP compared with an average of 6.2 per cent in SEE countries.

For the first time in several years, the pace of credit expansion in 2004 surpassed that for deposits (36.5 per cent y-o-y). As a result, the banking system is once again suffering from a lack of liquidity as loans exceed deposits. Moreover, foreign currency denominated deposits appear to be financing local currency lending, leaving the banks especially vulnerable in an environment of heightened risk of an exchange rate depreciation.

Read more by clicking the title.

Riverstone Snags Serb Network Contract

2005-07-08T01:19:00.000-07:00

Telecom Serbia has awarded Riverstone a contract to provide the Ethernet infrastructure for its new, multi-service MPLS metropolitan area network.

By DAVID SIMS
TMCnet CRM Alert Columnist

Riverstone Networks is announcing that Telecom Serbia, the country's incumbent service provider, has awarded Riverstone a contract to provide the Ethernet infrastructure for its new, multi-service MPLS metropolitan area network.

Upon completion, the network will be able to provide a host of new voice, video and data services to Telecom Serbia's residential and business customers in three major cities -- Belgrade, Nis and Novi Sad.

The first phase of the new Ethernet network will use Riverstone's MPLS-based RS 8000 and RS 8600 Ethernet routers for DSL aggregation and Internet access to both business and residential users.

Later, Telecom Serbia will use Riverstone's Virtual Private LAN Services to offer high-bandwidth Ethernet VPNs to its enterprise customers, complementing its current leased line, ATM and Frame Relay offerings.

"Ethernet is the key to our future," said Dragan Kovacevic, Chief Technology Officer, Telecom Serbia.

Riverstone doesn't mind pulling the hardship duty, towards the end of June they signed a deal with Lucent Technologies and Kazakhtelecom, Kazakhstan national carrier, to deploy their combined broadband ethernet solution to deliver data business and residential services to customers in three cities in Kazakhstan.

CR Firenze, BNP's Findomestic acquires Serbia's Nova Banka for 23 mln eur

2005-07-08T01:15:00.000-07:00

MILAN (AFX) - Italian consumer finance bank Findomestic Banca, which is jointly owned by Cassa di Risparmio di Firenze and BNP Paribas unit Cetelem, said it is acquiring a stake of not less than 95 pct in Serbia's Nova Banka, in a deal valuing Nova Banka at 23 mln eur.

Via the acquisition, Findomestic Banca intends to develop its consumer credit business model in Serbia, it said.

Large debts of Serbia and Croatia

2005-07-08T01:11:00.000-07:00

Republics of former Yugoslavia presently have debts towards foreign creditors of about 60 billion Dollars. This is three times more than ex Yugoslavia's debt at the time of the biggest economic crisis in the 80s of the last century.

Croatia is under the biggest threat regarding incapability to return the debts. Many analysts claim that situation in Serbia and Montenegro is not any better, while Macedonia is the most moderate in taking foreign money, Blic Daily published.

International plastics, rubber and equipment fair in September in Belgrade

2005-07-07T18:54:00.000-07:00

International plastics, rubber and equipment fair will be held in September at Belgrade Fair.

Exhibit range:
Petrochemical base products, Polyolephines, Vinyl polymers, Styrene homopolymers and copolymers, Polyamides, Acrylic resins and other thermal plastic materials.

2004 (i. e. Event) Statistics:
Exhibitors: 22
Local: 17
Foreign: 5
Participating countries: Italy, Germany, Hungary, Bulgaria, Greece, Chech Republic, Slovenia.

Indoor space: 595 sq. m.

Local exhibitors: 492 sq.m.

Foreign exhibitors: 103
Visitors: 18.582

Brief description of the additional program:
Scientific professional consulting under the title POLYMERS 2004, organized by the Plastics and Rubber Engineer Association (IPG), will take place on September 22 in the Festive Room of Head Office, starting at 9.30 a. m.
The Demand and Supply Day of Plastic and Rubber Products, Tools and Machines will take place on September 23, starting at 11.00 a. m., in the Hall 2, S level, organized by Juplas Business Association.

Prizes:
The prizes are divided into three exhibit groups: The Most Successful New Product, New Materials for Plastic and Rubber Products, Technical Innovation for All Exhibit Groups
Last Updated ( Friday, 26 November 2004 )

For more info visit this page.

U.S. Steel's move into Eastern Europe pays off

2005-07-07T17:41:00.000-07:00

When U.S. Steel paid $475 million to buy teetering Slovak steel maker VSZ five years ago, many thought the normally cautious, penny-pinching powers at 600 Grant St. had taken temporary leave of their senses.

The same doubts were cast three years later, when U.S. Steel expanded its central European beachhead by purchasing bankrupt Serbian steelmaker Sartid. That $33 million deal was negotiated against a backdrop of turmoil in Serbia, including the assassination of Prime Minister Zoran Djindjic at the Serbian Parliament building, Pittsburgh Post-Gazette wrote recently.

Now, U.S. Steel's risky strategy is receiving rave reviews. Each ton of steel from the European mills generates three times more profit than a ton from U.S. Steel's domestic plants. Since 2000, the old country has accounted for nearly half of the Pittsburgh-based steelmaker's operating profits.

With demand growing faster in the region than in the United States, U.S. Steel thinks the story will get even better.

Here you are link to first in series of articles about US Steel in Serbia published in Pittsburgh Post-Gazette:

http://www.post-gazette.com/pg/05177/528152.stm

Serbia stablished three new oil and gas industry companies

2005-07-07T17:36:00.000-07:00

Minister of Energy and Mining Radomir Naumov said that the government today adopted documents to establish three new companies in the oil and gas industry, wrapping up the cycle of adjustments of the energy sector to an emerging regional energy community.

The three newly founded companies, which emerged from the reorganized state oil and gas company NIS, are Naftna Industrija Srbije, which will explore for and produce oil and gas and sell oil products; Trans-Nafta, which will be in charge of transporting oil; and Srbija-Gas, which will transport, store, distribute, and sell natural gas.

Minister of Economy Predrag Bubalo said that the government also adopted a decree regulating the methods of settling liabilities to creditors of companies undergoing the process of selling-off state equity.

According to Bubalo, this is the final document concerning the changes to the Law on privatisation and it will help to speed up the privatisation of the most indebted companies.

Serbian economic sector presentations at fairs

2005-07-07T17:24:00.000-07:00

An assistance in the presentations of the Serbian economic sector at forthcoming fairs should be asked from the Regional Chambers of Commerce was accentuated at the meeting in the Serbian Chamber of Commerce. According to the schedule for the forthcoming period, the accent should be put on the presentations at fairs in the neighboring countries. This would, above all, refer to the Fair in Celje (38 MOS), International Economic Fair in Banja Luka (AGROS 2005), Grand Zagreb International Fall Fair, General Fair BiH-Zenica ( ZEPS 2005), International Furniture Fair, interior decoration and associated industry (AMBIEJENT 2005) and Skopje International Technology Fair (TEHNOMA 2005).

Organized participation of the Serbian Economy at these specialized fairs is the essential aim endorsed by the Serbian Chamber of Commerce, Bureau for Regional Cooperation and Promotion Services, who were the organizers of this meeting. Serbian Chamber of Commerce published.

Serbian Share Fund’s revenue totals €57 million in first six months

2005-07-07T06:07:00.000-07:00

The Serbian Share Fund said today that the sales of minority stakes in 128 Serbian companies in the first six months of the year brought in revenues totaling a €57 million.

The Share Fund pointed out that last week’s sales of minority stakes in nine companies generated a record weekly income of €17 million.

The Share Fund also recalled that the sell-offs of minority stakes in 375 companies since the beginning of privatisation have brought in a total of €332 million.

IMF concerned

2005-07-07T05:56:00.000-07:00

The International Monetary Fund is concerned because of delays in structural reforms in Serbia-Montenegro and the deepening macroeconomic imbalance.

The fund’s board of directors noted in a statement that despite tough fiscal policies, domestic expenditure is still high, putting strong pressure on inflation and the budget. The board also said that structural rigidity is the essence of macroeconomic imbalance which also restricts growth in production, discourages investors and increases business expenses.

The directors of the IMF said that reversing inflation with the help of a strong exchange rate for the dinar must be followed by even tougher macroeconomic policies and more rapid reform.

National Bank Governor Radovan Jelasic said the letter was not criticism but was merely pointing out the challenges facing the country.

Finance Minister Mladjan Dinkic says he is not surprised, noting that Serbia received three positive audits from the IMF last year.

“Of course Serbia still has problems to be solved, but you’ll never hear the IMF praise somebody. For us it is essential that we get through their board meetings and that we get a positive appraisal every six months. I expect that we will finish the program in November. I don’t believe that they will then praise us. There’s always something still to be done. It was bad if we hadn’t got a positive assessment for the fifth audit on June 29. Because we did get one, of course now a little talk is in order, to crank up the situation ahead of the sixth audit, but we’ll get through it, then there’ll be something else to be done the next day, and so on,” said Dinkic.

Serbian prime minister meets with Credit Agricole CEO

2005-07-07T05:49:00.000-07:00

Serbian Prime Minister Vojislav Kostunica met today with a delegation of French bank Credit Agricole, led by CEO Jean Laurent. Credit Agricole has recapitalised Meridian Banka with €34 million, becoming the owner of a 71 percent stake in the Novi Sad bank.

Kostunica said that there has been significant increase in foreign direct investment in the past several months and that the investment climate in Serbia is getting more and more favourable. Kostunica recalled that a series of government-proposed bills have been passed with the aim of creating legal security for investment.

Laurent said that a good legal framework in the country is crucial for Credit Agricole and he pointed out that the bank, given the large number of clients worldwide, wants to help attract more investment to Serbia.

According to him, Credit Agricole finances one third of France’s overall economic activity and has as much as 95 percent involvement of agricultural activity. It is also involved in financing the aviation industry and the hotel sector.

Nova Ljubljanska Banka buys Kontinental Banka

2005-07-07T05:48:00.000-07:00

Serbian Minister of Finance Mladjan Dinkic, Bank Rehabilitation Agency Director Milorad Dzemic, and National Bank of Serbia (NBS) Governor Radovan Jelasic have signed a contract with representatives of Nova Ljubljanska Banka (NLB) on the sale of 98.4 percent of Kontinental Banka to the Slovenian bank for €49.5 million.

Dinkic told reporters following the signing ceremony that this is the second successful tender sale of state equity in Serbia’s banking sector and he added that Novi Sad-based Kontinental Banka now has a significant strategic partner, whose presence in the market will help to raise the quality and competitiveness of banking services in Serbia.

Dinkic noted that Serbia’s banking sector has seen robust growth over the past year, in which total bank assets have grown by 70 percent, or by €3 billion.

He said that this is due to the arrival of foreign banks, which has compelled domestic banks to boost competitiveness and which has also had a positive impact on the entire economy.

Dinkic stressed that in these transactions the state got very good sell-off prices compared with the share capital of the banks and he explained that in the privatisation of Jubanka earlier this year this ratio was 1:1.51 and in the sale of Kontinental it stood at 1:1.76.

Dinkic said that Kontinental, Serbia’s 19th largest bank by assets, controls two percent of the banking market and operates a network of 70 branch offices across the country.

Kontinental’s total assets are €101 million, while its book value is €28 million, said Dinkic and announced that the official takeover will take place on July 12 when NLB is due to pay the full price.

He recalled that an international tender for Kontinental was called last September and that aside from NLB, it attracted Greece’s EFG Eurobank and Piraeus Bank as well as General Electric Capital Europe Ltd from the UK.

French BNP Paribas was the adviser in the privatisation procedure.

Serbia has earned more than €200 million through the sales of Jubanka and Kontinental this year, said Dinkic and announced that talks with Austrian Erste Bank on an acquisition of Novosadska Banka should be completed in ten days.

Speaking about details of the Kontinental sale contract, Dinkic said that NLB has offered to buy out small shareholders over three months at a price no lower than the price per share in the purchase of the state equity.

The Slovenian bank also pledged to keep the average number of employees over the next three years and to pay more attention to their professional development.

NLB Board Chairman Marjan Kramar said that the bank plans to improve Kontinental’s position through increased lending activity, expansion of the range of financial services, investment banking, housing loans, and the strengthening of financial ties between Serbia and Slovenia as well as through orientation towards small and medium sized businesses and entrepreneurs.

Metro Cash & Carry and Coca-Cola awarded as investors of the year

2005-07-07T05:41:00.000-07:00

Serbian Investment and Export Promotion Agency (SIEPA) Jasna Matic has handed over the OECD’s award for the largest greenfield investment in the region in 2005 to Metro Cash & Carry.

Matic told reporters that the fact that the award has gone to Serbia for the second consecutive year represents a sign that Serbia is among the region’s most favoured investment destinations.

The OECD awards foreign investors in Southeast Europe every year. At this year’s presentation ceremony, held in the Bulgarian capital Sofia, the Coca-Cola Hellenic Bottling Company (HBC) also received an award for its investment in Serbia-Montenegro.

Metro General Manager Damir First said that the wholesale chain has invested €42 million in Serbia to build the Metro Cash & Carry centre in Belgrade and that it plans to open two more stores in the country by the end of the year.

According to First, the construction of a Metro store in Kragujevac will be officially launched on July 8.

Recalling that the company has so far employed around 400 people in Serbia, First welcomed the successful implementation of value added tax (VAT), which he said has increased transparency in the market.

Coca-Cola HBC General Manager in Serbia-Montenegro Stefanos Vafidis said that the award represents recognition of the company’s efforts and commitment to investment in Serbia and he added that Coca-Cola HBC has operations in 26 countries, as part of the US-based Coca-Cola Company.

According to Vafidis, Coca-Cola has added over 1,000 jobs across Serbia since it first entered the market in 1997.

He said that Coca-Cola will continue to invest in Serbia and recalled that its Zemun plant is among the biggest such facilities in Europe, thanks to the recently installed third production line.

Matic said that the arrival of large international companies is proof that Serbia is becoming a stable market and she stressed that it is very important to ensure that foreign companies, aside from selling their products here, also open new plants and manufacture goods for export to other markets.

Matic said this year has had a good start when it comes to foreign investment and she expressed the hope that nearly €2 billion of foreign direct investment will enter the country by the end of 2005.

French businessmen to increase investment in Serbia-Montenegro

2005-07-06T07:02:00.000-07:00

Serbian Minister of Economy Predrag Bubalo said that French businessmen want to invest more in Serbia-Montenegro and that they are especially interested in infrastructure and communications, equipment for air traffic and industry, as well as in production of wine and food.

After attending a meeting in Paris called "Days of Economic Relations with Serbia", Bubalo told the Tanjug news agency that the meeting was also attended by Montenegrin Deputy Minister of Finance Milorad Katnic and National Bank of Serbia Governor Radovan Jelasic, as well as most important current and prospective investors in Serbia-Montenegro.

Stressing that French businessmen have been encouraged by the success of the conference of the European Bank for Reconstruction and Development in Belgrade, Bubalo said that the main objective at the moment is to attract French small and medium-sized enterprises to Serbia.

French investors have been further encouraged by the positive assessment of the feasibility study for Serbia's accession to the EU and presence of large French companies on the Serbian market, such as Societe Generale and Credit Agricole, both such institutions allowing for greater ease in payment operations by French firms and increased trust in the Serbian market.

Bubalo said that he had important meetings in Paris with representatives of the Alcatel telecommunications company and the Vansi company, which is one of the world's leaders in the field of construction, roads, energy and information technologies.

Vansi has two branch offices in Serbia, Bubalo explained and said that this company is interested in taking part in the construction of highway Belgrade-south Adriatic coast and roads Novi Sad-Subotica and Nis-Dimitrovgrad.

US lifts remaining sanctions

2005-07-06T07:00:00.000-07:00

WASHINGTON – US President George W. Bush has lifted the last raft of sanctions remaining in place against Serbia.

The decree lifts the sanctions imposed in 1992 and gives Serbia-Montenegro general trade preferences freeing a broad range of products from US import duties.

The US General Preferences system is aimed at assisting developing states with relieve from customs duties for almost five thousand products from 144 countries.

The award of preferential status, apart from its trade benefits, has a political spin-off by lifting the final wall of sanctions introduced in an attempt to curb the Milosevic regime.

Trade relations between Belgrade and the US were normalised in November 2003, when Serbia was restored to the category of most favoured nation.

Serbia fulfils all conditions for negotiations with EU in the energy sector

2005-07-06T06:33:00.001-07:00

Serbian Minister of Energy and Mining Radomir Naumov said today in Brussels that Serbia has met all conditions related to the energy sector needed for the beginning of negotiations on Serbia-Montenegro's accession to the European Union.

Minister Naumov is on a three-day official visit to Brussels together with representatives of the Serbian Electric Power Industry and the Oil Industry of Serbia. He will meet with representatives of the European Commission, the Stability Pact for South Eastern Europe and EU energy institutions.

Minister Naumov told the Tanjug news agency that on the first day of the visit, the EU representatives endorsed the request of the Serbian delegation to use EU funds for countries that are still not candidates for EU membership.

These funds should be used for solving social problems that can come out in the field of energy and for assisting the entire sector.

Naumov announced that the Serbian Electric Power Industry, as an associate member of the European union of electricity producers and distributors "Eurelectric", will soon file a request for full membership in the union.

Montenegrin prime minister urges US businessmen to invest in tourism

2005-07-06T06:33:00.000-07:00

Montenegrin Prime Minister Milo Djukanovic urged Wednesday US businessmen to invest in tourism, as an important sector of Montenegro's economy.

Montenegro sees its chances above all in the tourism sector, Djukanovic said during a business lunch with members of the US Chamber of Commerce in Serbia-Montenegro (SCG), urging them to invest in tourism accommodation facilities in the Ulcinj municipality.

Negotiations are underway with a group of serious investors from Western Europe on a project of yachting tourism in Montenegro.

Since 2002, when Djukanovic's government was constituted, a favorable climate for investments has been secured, he said, underlining that the growing number of investors will lead to a speedier transformation of Montengro's economy and its integration in the European Union.

Belgrade Road Company sale

2005-07-06T06:29:00.000-07:00

The Serbian Privatisation Agency announced that it signed a sales agreement with a consortium of the Nis Road Company, Emissio Broker and Delta M for 70 percent of the socially-owned capital of the Belgrade Road Company on June 23.

The company was sold for €18.8 million, while the investment programme is worth € 13.070 million. The buyer has accepted the obligatory social programme, as well as a series of additional obligations stemming from it.

Offers at the public tender for the Belgrade Road Company, announced on December 11, 2004, were made by the consortium of the Nis Road Company, Emissio Broker and Delta M, Alpine Mayreder GmbH from Austria and a consortium of Merkata from Belgrade, MAB Miljkovic from Zitkovac and Soja Protein from Becej. The last offer was declared invalid by the tender commission at its first session.

The tender commission approved the tender results and the tender list, declaring the offer of consortium of the Nis Road Company, Emissio Broker and Delta M as first ranked.

Serbia’s debt down €4.4 billion compared to 2000

2005-07-06T06:27:00.000-07:00

Serbian Minister of Finance Mladjan Dinkic said that Serbia’s debt today is €4.4 billion less than on December 31, 2000 and announced that the country’s debt now stands at €9.8 billion.

Presenting the bill on public debt to Serbian parliament MPs, Dinkic said that the debt was €14.2 billion at the end of 2000.

Speaking of the public debt structure, the Minister specified that domestic debt is €4 billion, which includes old savings and loans for Serbia’s economic revival, while the external debt is € 5.8 billion.

Dinkic underlined that the debt was reduced from 170 percent to 56 percent of GDP and assessed that the country has thus fulfilled this condition for entering the EU, which limits debt to 60 percent of GDP.

He announced that tomorrow he expects the fifth revision of the arrangement with the International Monetary Fund and a €700 million debt write-off with the Paris Club of Creditors, which should make Serbia a medium indebted country.

Regarding the legal provisions, the Minister said that the public debt will include contract debts, treasury securities, restructured debts, as well as guarantees given to companies and local authorities.

According to him, borrowing can be done in order to make up the liquidity deficit, financing the budget deficit, refinancing outstanding debts, investment projects and issuing securities.

Dinkic pointed out that according to this law, local self-governments will be able to borrow based on the public debt, so that the principal is 15 percent of the budget and added that the law envisages the forming of a public debt directorate and introduces parliamentary control of the public debt.

Italy's credit for Serbia's entrepreneurs

2005-07-06T06:22:00.000-07:00

Italian Government has approved to Serbia a credit of 33,250,000 Euros for development of small and medium size enterprises. The credits will be realized through 'Delta Banka', 'Eksim Banka' and 'Komercijalna Banka'. Radovan Jelasic, Governor of the National Bank of Serbia signed adequate agreements with these banks yesterday.

Italian Ambassador in Belgrade Antonio Zanardi Landi announced new credit line of 30 million Euros that Italy would soon provide for Serbia's entrepreneurs purchasing machines and equipment from Italian manufacturers.

'So far this has been the most favorable credit line for our entrepreneurs. The only condition is that 70 percents of each credit are spent on purchase of equipment and technology of Italian origin and to cover the costs in Serbia with the remaining 30 percents', Serbia Finance Minister Mladjan Dinkic said.

Majestic Hotel: 'Lloyd' guarantor of quality

2005-07-05T06:09:00.000-07:00

Inspectors of British 'Lloyd' have been controlling Majestic Hotel in Belgrade for almost a year before HACCP certificate was given to that hotel. At the moment Majestic is the only hotel in Serbia and Montenegro with this certificate which is actually a guarantee that any risk in preparation of food and drinks has been excluded. For hotel guests this means that they cannot get, for example, a cake made longer than eight hours before. Majestic Hotel serves Serb meals as per menu composed by our famous cook Miljan Stojanic.

Waiting for interest rates fall

2005-07-05T05:59:00.000-07:00

By the end of this year there will be more foreign than domestic banks operating in Serbia. However economists say the growth in competition will not bring cheaper credit in the short term. A rough calculation shows that someone buying an apartment on credit over twenty years under today’s conditions will pay double the cost of the apartment. For most of the population, credit is the only way of securing their own accommodation, B92 reported.

Zoran Jeremic, of the Financial Management and Insurance Faculty, says that the arrival of foreign banks and the ensuing competition will put pressure on interest rates.

“The Banks have very ambitious plans for establishing a market and increasing their share in the market and I don’t see any way for them to do that apart from dropping their interest rates,” he said.

It remains to be seen how fast that will happen in practice, with interest rates still high despite the fifteen foreign banks already on the market.

“Djordje Djukic, who teaches at the Belgrade University Economics Faculty, says that the process needs to be led by experienced banks from neighbouring countries.

“So, for instance, Inteza, the second largest bank in Croatia, has decided to lower interest rates for consumer credit. They are planning to take twenty per cent of the market here and this will affect the price, but not the quality, of services and force the other big players such as Raiffeissen to do the same,” he said.

Two years ago the average interest rate for home loans in Croatia was 5.18 per cent and in Serbia 8.07. Last year the average rate was 4.25 per cent in Croatia and 7.44 per cent in Serbia.

What affects interest rates
A member of Raiffeisen’s board, Svetozar Sijacic, says that competition will bring better credit conditions and a broader range of services from banks. However, he says, the interest rate does not depend only on the bank, but on the ways in which the state limits lending, particularly through compulsory reserves and deposits with the National Bank of Serbia.

It’s not true, he says, that foreign banks have pushed interests up. Rather, those behind Serbia’s monetary policy, in their attempt to protect the local currency, have made loans less attractive.

The general opinion is that loans will be cheaper in a year or two, depending on how much the banks fight for market share and whether doing business in Serbia becomes less risky for foreign investors.

Nine companies sold for more than 972 million dinars

2005-07-01T07:08:00.000-07:00

The Serbian Privatisation Agency held the 147th public auction today, selling ten companies for 972.3 million dinars.

The companies sold are:

1. DTP Trgopromet, Kraljevo
2. DTP Resnik, Tutin
3. AD Minel Elektrogradnja-DV, Belgrade
4. AD Cep, Belgrade
5. DP Pomoravlje, Nis
6. DP Ponisalvlje, Pirot
7. DP Gradnja-Kladovo, Kladovo
8. Autoprevoz, Zrenjanin
9. DP Ineks Moravica, Ivanjica
10. DOO Zastava alati, Kragujevac

The auction sales of Sloboda from Vrsac, Kazimir Veljkovic from Kragujevac, Zastava kovacnica from Kragujevac, Fontana from Vrnjacka banja, Arsenije Spasic from Zajecar, Utva-Servis from Pancevo, Perkon from Velika Plana, Mlekara from Pirot, 26th September-Metal from Krupanj and Agro-plus from Backa Palanka were unsuccessful.