The Serbian government is doing its best to create an optimal business setting, which would make Serbia a far more attractive investment destination. This is why economic policy trends are being defined in detail. Boosting economic growth represents the greatest chance for overcoming the crisis, along with the reduction of the black market, the new economy minister, Saša Radulović, told a press conference in the Serbian Chamber of Commerce.
In order that Serbia should overcome the crisis, it is necessary to legalize just a small part of the grey economy, whereby the gross social product would be officially increased by 2% in the next two years, said Radulović. He stressed that Serbia must not repeat the mistake it made a year ago, when taxes were increased through fiscal consolidation, as that reduced economic activity and commercial trade. Direct foreign investments are very important, but they cannot replace domestic companies, emphasized the minister. The goal is that economy should be less based on subsidies and more on a sound framework. Serbia has a huge deficit and a public debt of almost 60% of the GDP, which reduces the area for stronger measures. Therefore the government is now searching for a solution by reducing public spending and by applying measures for the stimulation of the economic growth.
The measures, to be known in mid-October only, include amendments to several laws – on labour, planning and construction and bankruptcy. One should focus on the privatization system as well, which is one of the fields affected by corruption most. The 615 companies falling within the competences of the Privatization Agency employ some 100.000 workers. 179 of the companies are in restructuring and the problem should be resolved by mid-2014. Therefore public companies as well will have to submit their IDs, as it were, which will help in the preparation of a draft labour law and amendments and will facilitate property sale. There is also the liquidity issue as a large part of the business sector is in the state of bankruptcy or is nearing bankruptcy, which has resulted from the poor privatization process.
One of the major problems in the country is unemployment, the state of Serbia having faced the loss of 300,000 jobs, in the legal sector alone, since the beginning of the crisis. If one adds the grey economy field to that, the number is twice as high. That is a huge shock for economy, from which the state will be recovering for a long time and with difficulty. Minister Radulovic emphasized that, so far, the governments have dealt with the consequences of those problems only, but that Serbia does not have enough funds to put out fires, so it is necessary to take measures that will deal with causes. The tax reform, which is due in October, will have to define the progressive taxation system more clearly, on the higher earnings higher tax principles applied in the world. Radulović emphasized that the progressive taxation system was the best way for economic subsidies and those who have employed the most people would have been released of the heaviest burden.