Borba, Jan 15, 2005, page 29

January, 2005. No 1 |

beka A 08

eCOnom

y & finance

VAL introduced in

Minister says it will not cause inflatory shock

BELGRADE - SERBIAN FINANCE MINISTER MLADJAN DINKIC HAS SAID THAT THE VALUE ADDED TAX (VAT) WILL NOT CAUSE AN INFLATORY SHOCK.

“According to initial effecis, the prices of about 85 percent of products and services have dropped, those of five percent of products and services remained the same, while the prices of ten percent others have increased... Consumers Will not feel any major growth of prices and their household budgets will not suffer,? Dinkic told the Belgrade daily Blic.

Stressing. that he was satisfied with the initial results, Dinkic said that the VAT system needed about three months to start running: smoothly and that at least six months were needed for all implementation problems to disappear.

He added that the living standards had risen between eight and ten.percent in 2004 and that the social product had increased at the same rate.

In the Jan 1 – 10, 2005 period, the Customs Administra-

Metro opens

BELGRADE - METRO CASH AND CARRY OPENED ITS FIRST OUTLET IN THE, BELGRADE SETTLEMENT OF KRNJACA IN JANUARY, OFFERING 20,000 TYPES OF CONSUMER GOODS, 90 PERCENT OF THEM LOCALLY PRODUCED, AT 8,300 SOUARE METRES.

The outlet was opened by Serbian Minister of Economy Predrag Bubalo and International Economic Relations Milan Parivodic, President of the Metro Group Managing Board Hans Joakim Kerber, Metro Cash and Carry Serbia Manager General Damir Firscht and Deputy German Ambassador Joakim Leiker.

Bubalo said that the arrival of foreign investors was directly linked with the progress of market economy in Serbia and added that greater competitiveness and exports Were among the most important goals of privatisation.

“The opening of your distribution centre will stimulate our economy and produ-

tion realized a total of 2,578 customs receipts which accounted for 41, 482 112 dinars of Value Added Tax (VAT), Customs Administration Director Dragan Jerinic told a press conference on January 10th.

The overall customs duties, including, VAT, for these receipts, amounted to 726, 786 300 dinars, Jerinic set out.

He added that starting Jan 1, the Customs Administration introduced measures to prevent VAT avoidance.

Introduced was on-line filing of documents and control of banking guarrantees, developped was a project of a strategy for preventing VAT avoidance and set up was a special body to monitor the implementation of this strategy.

At the initiative of the Customs Administration also formed was a coordination body for fighting: organized crime, Jerinic recalied adding that it would be made up of eight Customs representatives, as Well as the representatives of the Tax Administration, the Foreign Currency Inspectorate, the border agency, the Administration for Fighting Organized Crime (UB-

POK) and the Security-Informative Agency (BIA).

In 2005, the Customs Administration will also focus on smuggling prevention by

Cash&Carry first outlet

| cers.” Bubalo said and added

that consumers would also benefit from the opening, of the first Metro outlet in Serbia because of greater offer and lower prices.

Parivodic said that Serbia was open to foreign investments and voiced hope that

citizens would start to live better soon.

Metro in Krnjaca employs about 400 workers and managers from Serbia, Kerber said and added that each of the six new outlets to be opened in Serbia in the next few years would employ at least 300 people.

Jerinic pointed out that the Serbian „government. had adopted a decree on special conditions for trade with Kosovo and Metohija which

stepping up the control of multiple border crossings, developping a value list of highrisk goods linked to possible VAT avoidance. r

Big interest

enables the regulation of trade of foreign and domestic goods with the province aimed at avoiding possible abuses.

for ınvestment

VIENNA - SERBIAN FINANCE MINISTER MLADJAN DINKIC HAS TOLD TANJUG THAT AT THE 10TH FCONOMIC FORUM OF CENTRAL AND EASTERN EUROPE, OPENED IN VIENNA IN JANUARY BY AUSTRIAN PRESIDENT HEINZ FISCHER, WAS CONFIRMED A BIG INTEREST FOR SERBIA AND INVESTMENT IN ITS BANKING SYSTEM, TELECOMMUNICATIONS AND METAL IN-

DUSTRY.

Voicing great satisfaction for having the honor and privilege of being among the first to address the Forum, in which. are taking part some 1,100 people from the financial world from across Europe, Dinkic expressed his opinion that the Serbian economy was looking at better days and that greater investments were certain to come to Serbia this year. Dinkic, in his address to Forum participants, pointed to what was characteristic for Serbia, and that is in 2004 was achieved the highest economic growth compared to countries in the region, of 8.5 pct, although other countries also, he noticed, had a high economic growth, Poles for example of 5 pct, Hungarians of 3.5 pct. *I think that there will be greater investments this ycar than in the previous tears, because we started late, only by mid-2004, to conduct a more radical economic programme an d the results if that programme' became visible by the end of last year and I am certain they will be even m ore visible in this year,” he emphasısed.

Serbian budget at record low Hard currency reserves

BELGRADE - NATIONAL

BELGRADE - THE SERBIAN BUDGET DEFICIT IN 2004 WAS ABOUT 22,3 BILLION DINARS, WHICH IS 22 BILLION LESS THAN PLANNED, WHILE A SURPLUS OF 1,05 BILLION DINARS WAS RECORDED IN DECEMBER 2004, SERBIAN FINANCE MINISTER MLADJAN DINKIC SAID ON JANUARY 5TH.

The budget deficit was reduced from four percent of the Gross National Product (GNP) in 2003, to a record low 1.7 percent GNP in 2004, Dinkic told reporters adding that the same deficit is planned for 2005.

He recalled that the International Monetary Fund (IMF) had: demanded that the 2004 budget is reduced from some 45 billion dinars to 32.4 billion.

“The Serbian budget fulfilled all obligations, via the Treasury, towards its users, leaving a surplus of about eight billion dinars which will be carried over into 2005 as a budget reserve,” Dinkic set out.

Commenting. the introduction of the Value Added Tax (VAT) starting Jan l, 2005, Dinkic stated that the Customs Administration was the first to pay 4.3 million dinars 'on Tuesday on this basis.

According to him, the first VAT revenue from tax payers

is expected on Feb 10.

“The GNP recorded a 8.1percent rise in the first 11 months of 2004, but after the December data are processed, an even bigger growth compared to 2003 can be expected,” Dinkic pointed out.

He added that his optimism is based on the increase of industrial production late last year.

Dinkic noted that the foreign trade deficit reached a re-

cord high, exceeding 6.1 bil-.

lion dollars, with bigger imports at the end of 2004. However, in January this year, a record low foreign trade deficit is expected due to the introduction of VAT.

BANK OF SERBIA'S (NBS) HARD CURRENCY RESERVES ROSE BY 694.44 MILLION DOLLARS OR 19.6 PERCENT IN 2004, REACHING THE VALUE OF ABOUT 4.244 BILLION DOLLARS OR 3.117 BILLION EUROS, THE NBS SAID IN A STATEMENT ON JANUARY STH

“In December alone, (the NBS) hard currency reserves grew by 238.7 million dollars,? the NBS said and added that the total value of hard currency reserves at the end of 2004 reached 5.15 billion

dollars together with the re-

serves of authorised banks, which amounted to about 901.8 million dollars in late December,

· The NBS registered the most important inflow in its

hard currency reserves from

exchange transactions and

the total net inflow from the.

purchase of foreign cash in 2004 amounted to about 1.849 billion dollars, which was by 478.3 million dollars or 35 percent more than in 2003. OS PEC VAL SO i

In 2004, the NBS settled the hard currency demand on the interbanking hard cur-

rency market and continued

servicing all due claims. A to-

tal of 253.5 million dollars were paid for the settlement

of the debt arising from old

hard currency savings and 213.2 million dollars for the settlement of the principals of previously approved IMF loans. “This means that a significant, nearly 20-percent increase of the NBS hard currency reserves was realised last year despite the fact that the fully settled obligations towards depositors at old hard cur-

rency savings accounts and

foreign creditors were greater than the inflow to the NBS hard currency reserves by 260 million dollars,” the statement said. ,

New foreign currency savings in Serbia up by 36,4 percent

Belgrade – Last year new foreign currency savings were up by 36,4 percent, exceeding 1,42 billion curos, the National

. Bank of Serbia announced.

“On the average, last year the daily rise in savings was some 1,5 million curos, and in December alone citizens paid a total of 52,9 million curos into their foreign currency deposits, a statement said. \

Good social programs above all

Belgrade - Serbian Minister for Labor and Social Policy Slobodan Lalovic said in January that the restructuring of public and other companies must be accompanied by a good social program and that workers who are compelled to leave their companies will be offered an adequate alternate program.

“The loss of the job in the company in which a worker is currently employed will not mean loss of work, and this will be the essence of our social policy, and in order for this to be so, we must also have the means that we could provide for these persons, Lalovic said in a statement for Serbian Radio Television RTS.

The funds secured through the social program, joined with the funds from the National Employment Service and the Development Fund, will be used for creating offers to employees as a real alternative, he said. . j PG

Lalovic announced that cight public companies will be rcstructured this year, as well as large numbers of former socialist giants, in which this process should be completed in the course of this year and the next.

No real exports without brands

Belgrade - Awareness of the importance of brand names and their market value is still lacking in Serbia, and so it happens that the company alone is sold in the course of privatization, without the familiar brand name of its products, as is the usual case in the world, domestic marketing experts have concluded.

These experts constantly point to the fact that businessmen who wish to export must bear in mind that products are sold on the world market also by their recognizable brand name and that they must constantly work on their creation and promotion.

Belgrade-based MARK-PLAN marketing and advertizing agency President Joseph Loncar explained that a product must first acquire renown on the domestic market before it can be exported successfully, and that this is why it is very important to create brand names. |

“We have many products oftop quality which deserve the attention of consumers, but they are not advertized in the correct way and consequently go unnoticed, and that is why we are now exporting: mostly raw materials and semimanufactured products,” Loncar said.

A brand name is a broader term than a trademark, which is registered with the Department for the Protection of Intellectual Property, and it is exclusively up to consumers to decide whether a trademark will become a brand name, Loncar specified.

Local factors and inflation growth"

Belgrade - The 2004 inflation rate of 13.7 percent was ncarly twice as high as planned, and local factors - public consumption and salaries in public enterprises – had a greater effect on a speedy growth of prices than the growth of the international prices of fuel, Stojan Stamenkovic ofthe Economic Institute in Belgrade said recently. At the promotion of the Macroeconomic Analyses and Trends bulletin, he said that the increase of the price of liquid fuel had led to a 3-percent increase of the total inflation rate, while a previously unanalyzed factor - local administra– tions, their consumption and growth of prices in their competence – had a significant effect on the growth of reta1l prices. The salaries in the public enterprises on the republican and local levels in the first 1] months of 2004 rose by 19.6 percent against the same period in 2003 and, in real terms, once that living costs are deducted, this increase amounted to 7.6 percent, Stamenkovic said. He said that this included not only a 15.6-percent increase (four percent in real terms) of salaries in state-owned public enterprises, which the International Monetary Fund follows and limits, but also a 29.7-percent increase (16.6 percent in real terms) in local enterprises. The average number of employees in the first group reduced by 2.8 percent, while that in the second rose by 2.8 percent. As for the composition of retail prices within the general 13.7-percent increase last year, the prices of services registered a major increase. The increase of transport services accounted for six percent of the overall price increase. Stamenkovic said that the question of viability of the economic system had to be opened in connection with the fluctuation of prices. The republican and local levels are both responsible for the functioning of the economic system, since city administrations have taken major responsibilities regarding: consumption and determination of the price of local services.Stamenkovic said that public consumption at the local level had to be subjected to general public expenditure limits, because large revenues did not imply that there was a right to greater consumption. He said that public enterprises had to be privatised and that anti-monopoly legislation had to be adopted, in keeping with the basic EU standards.

State capital in former federal public media to be transformed

Belgrade - Director of the Serbia-Montenegro Council of Ministers Information Directorate Slobodan Orlic said in Belgrade on January lIth that the Serbian and Montenegrin governments had adopted a document on the transformation of Serbia-Montenegro”s state capital in public media and authorised the competent ministers to sign it.

Speaking with the head of the Media Department of the OSCE Mission to Serbia-Montenegro, who was interested in the current phase of an agreement on the basic founders? rights and procedure of ownership transformation of Serbia-Montenegro's state capital in public media, Orlic said that after the signing, this document would be verified by the state union”s Council of Ministers and that it would then take effect.

Under the agreement, the Council of Ministers is to decide on the transformation of the status and ownership of the state capital in former federal public media, while the procedure itself would be carried out in keeping with the regulations of the member-state in

· Whose territory the relevant medium is based, the statement said.

Funds earned in the ownership transformation process would be distributed among the member-states in proportion, with the percentage they had contributed to the financing of Serbia-Montenegro's competences in the following way - Serbia would receive 93.3 percent and Montenegro 6.7 percent of all funds. ·