Serbia to spend its way out of coronavirus crisis

Serbia to spend its way out of coronavirus crisis
By Denitsa Koseva in Sofia March 12, 2020

Serbia’s Prime Minister Ana Brnabic said on March 12 that the government will invest an additional RSD24bn (€200mn) in infrastructure projects in order to soften the expected negative effects on the economy from the coronavirus outbreak.

The country has already confirmed 19 Covid-19 cases and is taking steps to limit the spread of the disease.

Brnabic told a press conference dedicated to the coronavirus and its effects that the economy is “holding up perfectly” at present. 

However, she warned of the future impact, noting that even according to conservative estimates, the coronavirus pandemic will reduce global growth by at least 0.5% this year.

According to Brnabic, the most threatened sectors in Serbia are tourism, transport and logistics.

The government has already spent funds to provide 160,000 free vouchers to citizens to spend their vacations in Serbian resorts, hoping to support the sector.

Brnabic also said in the statement that all infrastructure projects in Serbia are being implemented without delay at the moment.

“[I]ncreasing investment, public and private, is always the best remedy to slow growth,” the prime minister said. 

Also on March 12, the Serbian central bank decided to cut its key rate by 0.5bp to 1.75%, its lowest level in the inflation targeting regime intended to support Serbia’s economic growth, aiming to respond to the increased insecurity in the international environment triggered by the spread of the coronavirus.

“By trimming the key policy rate in the conditions of low inflationary pressures, the [National Bank of Serbia] is providing additional support to credit and economic growth,” the central bank said in a statement.

Brnabic reinforced this message, commenting that: “Given the low inflationary pressures, I expect that the measures will facilitate the growth of credit and economic activity in the private sector.”

Meanwhile, Serbia closed three checkpoints at the border with Bosnia & Herzegovina due to the coronavirus outbreak. Bosnia confirmed several cases earlier in March. According to March 12 data, all the infected people are in Bosnia’s Republika Srpska.