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Serbia to Privatize Publicly Held Companies

Published: September 22, 2012; 13:03 · (Vindobona)

In order to reduce the budget deficit, the Serbian Minister of Finance Mladjan Dinkic plans to sell a part of the state-owned companies.

Serbia to Privatize Publicly Held Companies / Picture: © Vindobona.org

Dinkic explains that Serbia will not only cover its budget deficit by new debt, but also by privatizing publicly held properties. A part of the companies should be kept, such as the Belgrade Airport Nikola Tesla. The energy sector should not be sold either. However, those companies which are not competitive in the long term should be privatized. Moreover, some fixed assets may be sold too, Dinkic explained.

For economists, the Serbian sovereign debt rating would be an indicator that the reforms of Serbia´s government are not enough. The main weaknesses would be the low growth and the high budget deficit. Moreover, the low degree of efficiency of Serbian companies would be concerning.

At the moment, Serbia faces Serbia´ is threatened by a public debt crisis. Last week, Dinkic announced that the VAT rate was increased from 18% to 20%. Before, Dinkic met a delegation of IMF. The government explained that IMF´s claim to freeze salaries in the public sector and pensions will not be implemented.

In order to prevent a national bankruptcy, Serbia has to increase its debt level by € 1.5bn until the end of the year. According to Vldimir Gligorov at Vienna Institute for International Economic Studies, Serbia is already in a severe stage. "Serbia is already at the beginning of a bankruptcy because it is unable to service its debts at home and in international financial markets."

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