Serbia shrugs off criticism to adopt central bank law

By bne IntelliNews August 6, 2012

bne -

The Serbia parliament adopted a law on August 4 that increases parliamentary control overthe National Bank of Serbia, despite warnings from the EU and International Monetary Fund over threats to the central bank's independence.

NBS governor Dejan Soskic resigned on August 1 over the forthcoming legislation, saying that the proposed amendments "significantly undermine the bank's independence and pave the way for professional degradation and adoption of decisions ... which may give rise to economic and financial instability."

The bill, and Soskic's resignation, are part of a battle between the former governor and the new government. Appointed by the previous Democratic Party government, Soskic gave up after a long-winded fight with Serbia's new administration, led by the Progressive Party of President Tomislav Nikolic and the Socialist Party of Serbia led by Prime Minister Ivica Dacic. "The new political leaders, in particular, have been notably vocal about their displeasure with the central bank in its reluctance to ease monetary policy," said analysts at RBS.

Dacic, a one-time foul-mouthed political bruiser in the former dictator Slobodan Milosevic's government of the 1990s, has made it plain he supports loosening the government purse strings to try to get Serbia's faltering economy moving again. In the second quarter, GDP shrank 0.6% from the same period a year earlier, after a 1.3% decline in the first quarter.

However, to embark on expansive fiscal policies, the government needs the cooperation of the NBS. However, Soskic insisted on running a restrictive monetary policy aimed at holding down inflation. He and others warn that Serbia's public finances are moving in the same direction as Greece's, and have called for fiscal restraint.

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

EU, Western Balkans leaders agree action plan for refugee crisis

bne IntelliNews - Leaders of EU member states and Southeast European countries on the main ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335
Dismiss