Serbian economy improving ahead of snap general election

Serbian Premier Aleksandar Vucic points to impact of economic reforms as an electoral platform for pursuing EU accession.

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

24 Mar 2016

Serbian Prime Minister says his country is on track to meet a "four-year plan" that he hopes will pave the way for it become the newest EU member in 2020.

He accepts that achieving membership by the end of this decade is ambitious but believes this would be a major step in cementing peace and democracy in the Balkans.

Speaking ahead of snap Serbian elections called for 24 April, Vucic set out his stall for the next four years, saying, "I will tell you what I want to achieve.”


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"I want our education and health system to reach a modern European level. I want every person in Serbia to have a decent job, so we can eradicate poverty and offer families a higher living standard. We have to continue our fight against corruption and establish our country with one rule of law for all."

Conceding that these are "very big challenges", Vucic, the country’s most powerful politician added, "they are not easy but if we all stay united, together we can deliver."

"For that we need another full term to continue the reforms and complete the transformation of Serbia into a modern economy, with European living standards, offering a decent place for raising children."

The latest proof of the impact that recent measures have had in Serbia came last Friday, when the outlook on the country's credit rating was raised to positive by Moody’s Investors Service. It cited the country’s implementation of structural and fiscal reforms in helping ease its debt burden.

Growth in the ex-Yugoslav republic’s biggest economy is set to more than double to 1.8 percent this year.

Vucic says he wants to narrow Serbia’s budget deficit and halt increases in public debt through planned measures, including moving people from the public to private sector.

As well as addressing internal reform, Serbia has been hard hit by the migrant crisis. It has been a major transit point for hundreds of thousands of refugees. However, with the crisis engulfing the continent, Vucic also pledged to take a "quota" of refugees as part of an EU-wide solution.

He says member states should agree to take up to two million genuine asylum seekers - a figure he says equates to less than half a per cent of the EU population - then share them out equitably.

"That's nothing for Europe and it can even create new value economically."

Next month's Serbian elections will be the county's third in four years and have been called two years earlier than they are actually due under the country's constitution.

Some have criticised the decision but the PM defends the move, saying, "I wanted to cut all these topics and say, ok, now it's your chance to create a government the people of Serbia would like to see."

"Serbia needs four more years of stability so that it is ready to join the EU. I will go with my programme, which is to finish our EU preparation before 2020."

A coalition around the SNS (Serbian Progressive Party) won 158 of the 250 seats in the 2014 election.

Once a hardliner for a Greater Serbia and a former information and defence minister, Vucic says he is now committed to joining the EU.

Brussels has called for a pause in adding new members to the bloc and has ruled out any further enlargement before 2020, even for countries that have begun accession talks.

Serbia, a candidate country since 2012, formally opened EU accession talks last December. Its Balkan neighbour Croatia acceded in 2013 and Bosnia Herzegovina formally applied to join this month.

Serbia's negotiating procedure is similar to the one being applied to Montenegro; Chapters 23 and 24 (on judiciary, security and human rights) are among the first to be opened and the last to be closed. Any potential standstill in these two chapters may affect the entire course of the talks.

In April 2014, when SNS swept to power, Serbia faced a daunting economic outlook. Public debt was 64.1 per cent of GDP and the deficit was 6.6 per cent.

Under Vucic's stewardship, the government pursued a reform agenda. The result of this and other measures began emerging late last year.

Growth, of 0.8 per cent, returned last year, following six years of contraction. This growth is expected to continue towards double-digit numbers in 2016 and 2017.  In addition, unemployment has fallen to 17.3 per cent from a peak of  23.9 per cent in 2012. In the last two years, some 120,000 new jobs have been created.

Despite cuts in public sector salaries, overall wages remained stable. This pointed  to a healthy increase in private sector salaries in 2015.

Serbia attracted €1.7bn of foreign direct investment last year, while government investment also increased. This resulted in the completion of  overdue infrastructure works around the country.

Further evidence of improvement came with the recent The World Bank's "Ease of Doing Business" index, indicated further evidence of improvement, with Serbia moving from 91st to 59th place. 

"The hard work," the 46-year-old Vucic said, "is starting to pay off and there is room for optimism."

Looking to the future, he predicts that: "2016 will be better for citizens, 2017 even better, with dynamic growth as a result of the reforms and of even more in foreign investment.

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