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Serbia: more rate cuts possible after 50 basis-point reduction
Serbia’s first interest rate cut in 17 months is more dramatic than expected as the central bank looks to encourage a sluggish economy and bets that a recent inflation spike is temporary. But consumer price growth may still come in at double digits for 2013.
The National Bank of Serbia (NBS) this week cut its repo rate by 50 basis points to 11.25 per cent, more than the 25-point reduction forecast by a Bloomberg survey and other analysts. Continue reading »
Serbian steel mill: firing up politics more than furnaces
Generating at its peak 13 per cent of Serbia’s export earnings, Zelezara Smederevo steel mill on the banks of the Danube is a symbol of the supposed glory days of Serbian industry.
So when the plant’s government owners restarted one of its two furnaces on April 22 after nine months of inactivity, it seemed to bode well for Serbia’s manufacturing sector – and the rest of the country’s economy, which slipped back into recession last year. But the uneconomical mill’s future will be dependent on finding foreign investors, and reliable customers for its output. Continue reading »
Serbia clears 1st hurdle on EU road
Serbia was regarded as an international pariah as recently as the last decade but it moved a step closer to joining the European Union on Monday, an acknowledgement of the Balkan country’s return to the continent’s mainstream. But the road to the EU is a long one and will be fraught with difficulty. Continue reading »
Serbia and Kosovo ink deal; move closer to EU
Kosovo's Prime Minister Hashim Thaci (R) and Serbian Prime Minister Ivica Dacic (L)
Just when many were expecting another breakdown in negotiations amid mutual recrimination and international hand-wringing, a breakthrough.
On Friday, Serbia and Kosovo inked a proposal agreement that should see both countries move closer to the EU, and that could prove a milestone in the quest to end one of Europe’s bitterest and most damaging territorial disputes. Continue reading »
Russia’s helping hand to Serbia: not much help
A $500m Russian loan to Serbia may provide a brief fillip to the Serbian economy but it won’t be a substitute for a long-awaited deal with the International Monetary Fund. The loan came as Russian Prime Minister Dmitry Medvedev underlined Moscow’s support for Serbia over the issue of Kosovo — and as European Union-brokered talks on the disputed territory stalled, putting Serbia’s EU accession process in question. Continue reading »
Serbia: rates on hold, cuts in the offing
After eight rises in nine months, Serbia’s central bank has this week opted to keep interest rates on hold despite annual inflation in double digits.
The National Bank of Serbia (NBS) kept its repo rate at 11.75 per cent in the hope that consumer price inflation will moderate to within its 3.5-6.5 per cent target band by the end of the year even though it’s running at over 12 per cent. Fingers and toes crossed, then. Continue reading »
CEE bonds: wheat and chaff
It may be true that bond investors will buy any old junk in exchange for yields these days but they can at least, it seems, tell one issuer from another.
After Hungary raised $3.25bn on Wednesday, including $2bn in a 10-year bond yielding 5.4 per cent, it was Romania’s turn on Thursday, selling $1.5bn in a 10-year bond yielding 4.5 per cent. Continue reading »
Gazprom pushes on with South Stream
Russian energy giant Gazprom is set to push ahead with its controversial South Stream gas pipeline which will run to the heart of Europe, while progress on an EU-backed rival project is, as usual, patchier.
On Monday, Srbijagas – a Serbian government-owned monopoly – announced that it would start work on the 470km, €1.7bn stretch of South Stream running through Serbian territory in December. Continue reading »
Serbia: central bank answers concerns about independence – with a rate increase
President Nikolic
This week’s Serbian interest rate hike may serve as an assertion of the central bank’s independence in the face of government challenges and of its commitment to tight policy. But it will it be enough to stop inflation hitting double figures?
The National Bank of Serbia (NBS) raised its benchmark rate 25 basis points to 10.75 per cent due to increasing price pressures. Inflation hit 7.9 per cent in August, well above the 5.5 per cent upper end of the NBS’s target range, and is expected to climb further. Continue reading »
Serbia’s film industry: take two
By Nicholas Watson of bne
Emerging Europe’s luring of film and television productions away from traditional US and west European locations has been one of the region’s success stories over the last two decades.
With one of eastern Europe’s newest film studios, Serbia is now competing head to head with the Czech Republic, Hungary and Romania. But industry players say it needs help from the government in the form of incentives if it wants to attract more big foreign features. Continue reading »
Serbia: getting a fiscal grip?
As we enter the final quarter of a year that has proved almost disastrous for Serbia’s public finances there are signs that the new government is ready to get a grip on the fiscal situation. But the structural reforms that the IMF and investors seek are still some way off. Continue reading »
Serbia puts hopes in Chinese finance for infrastructure projects
With a yawning budget deficit and debt soaring above target levels, Serbia is not in a strong position to pump money into infrastructure programmes. The economy is going backwards and a swift recovery its public finances isn’t on the cards. So how to build much-needed roads and replace aging power plants? Like many emerging markets across the world, Serbia is turning to China. Continue reading »
Serbia wants to talk money, while the IMF wants to talk politics
Serbia’s new government is limbering up for what promise to be gruelling negotiations with the International Monetary Fund that could save the country from fiscal crisis.
On August 27, the local press reported that Serbia would be seeking a new loan agreement with the IMF in a meeting provisionally scheduled for mid-September. The government apparently hopes to replace a €1bn deal that was frozen in February after the country exceeded its debt and deficit targets on the previous administration’s watch. Continue reading »
Serbia’s tough choices
Photo: Bloomberg
Serbia’s new government faces some harsh realities including a large and growing budget deficit, a shrinking economy and a substantially-depreciated currency. A pledge this week to restart talks with the International Monetary Fund and tackle the budget gap shows a willingness to address them.
But it will be hard to square those promises with other ones made only recently to voters. The nationalist-socialist led ruling coalition has some way to go in reassuring investors and international institutions. Continue reading »
Serbia’s controversial new bank governor
The appointment of a senior party official with an ultranationalist background as the new governor of Serbia’s central bank has heightened concerns about the bank’s independence at a time of great economic sensitivity for the country.
The government has stoutly defended yesterday’s uncontested election of Jorgovanka Tabakovic, deputy leader of the Progressive Party (SNS), pictured, the largest grouping in parliament. Tabakovic was the SNS’s candidate for prime minister at the elections in May and is a close ally of president Tomislav Nikolic. Continue reading »
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