Corruption has significant consequences for the economy of Serbia, and the progressive economic policy is reduced to a series of populist measures without a vision, according to Dejan Šoškić, a professor at the Faculty of Economics.
Professor at the Faculty of Economics in Belgrade and former governor of the National Bank of Serbia (NBS) Dejan Soskic he told FoNet that the continuation of the policy of promises income growth of citizens, in the conditions of a stagnant economy, undoubtedly creates inflationary pressures in Serbia in 2026.
"In domains such as food, communal services, electricity and fuel, there are many reasons for concern, because there is no smart and consistent agricultural policy, there are no signs of regulation in the direction of rationality of business and the suppression of corruption in public companies, nor of strategic household behavior in such key areas as the stability of energy supplies," noted Šoškić.
He reminds that the International Transparency organization ranks Serbia among the four most corrupt countries in Europe, and corruption causes multiple consequences.
"As a rule, it causes a decline in quality in public procurement and deliveries, and, of course, higher prices and costs for public budgets paid by taxpayers. But it also causes an increase in costs in public companies, which then spills over into an increase in their prices, which we all pay as their consumers," says Šoškić.
It would be normal for inflationary impulses to weaken in an economy that significantly slowed down economic activity last year, but despite that, inflationary pressure is possible in Serbia, claims the former governor of the National Bank of Serbia.
"In our country, for a whole series of years, 'economic policy' has been conducted as a collection of one-time popular measures without a clear macroeconomic analysis and vision. Not only do we see inconsistent measures being adopted and implemented in the domain of economic policy, but more and more attempts are being made with administrative measures to achieve some desired results".
Šoškić believes that these administrative restrictions, prohibitions and regulations, among other things, indicate the wrongness and inefficiency of the previous economic policy measures:
"As for the administrative measures decrees, I believe that they will remain as long as the current political establishment thinks that the effect of those measures will bring them some desired political popularity in their electorate, which could be until the next election."
The news about the closing of factories and the dismissal of workers in Serbia, which became frequent at the end of last year, should not be surprising, because this is precisely the consequence of wrong and uncoordinated macroeconomic policies.
"I personally indicated on several occasions that it would happen a few years ago. Namely, it was obvious that in conditions of wage growth without productivity growth and with a fixed exchange rate, all Serbian exporters and other producers lose competitiveness both on the foreign and domestic markets. We see this in agriculture as well, where more and more are imported in domains where we had both domestic production and competitiveness and exports," Šoškić said.
And such a trend will continue as long as the popular measure of raising incomes is combined with the popular measure of a fixed exchange rate in conditions of stagnant productivity in the economy.
"Just as the public interest and state property are doomed to failure and failure in conditions of corruption, so is economic policy doomed to failure and failure in conditions in which it is implemented as a mere sum of politically popular measures," says Šoškić.
Regarding the situation of the Serbian Oil Industry (NIS), he stated that the decision of the US Office of Foreign Assets Control (OFAK) to grant the company a license to operate until January 23 is only a temporary measure, with the aim of finding an acceptable solution.
The stabilization and normalization of NIS operations is certainly of great importance for the Serbian economy and a priority at the moment, but solutions should be sought in models that enable the potential further evolution of the ownership of that company in a direction that will protect the interests of the Serbian state to a greater extent.
"A permanent solution should be sought in the models of the more successful countries of Central Europe (Austria, Poland, Hungary, etc.), where there is a national oil company majority-owned by the state, which operates successfully, expands its operations in the country and abroad and ensures regularity, stability and favorable prices in the supply of energy to the domestic economy and citizens," Šoškić believes. Of course, that market segment should be free for other suppliers from the country and abroad, in order to encourage competitiveness and strengthen the protection of the interests of consumers and the economy.
Šoškić points out that the whole situation with the NIS could certainly have been predicted a long time ago and that the risks of its outbreak could have been eliminated in time. He also believes that the very fact that Serbia shaved in such circumstances is proof of failure in defending the interests of the country, for which several previous convocations of the Government of Serbia are responsible.
"Any change of foreign owner to a new foreign owner is, in my opinion, a suboptimal solution. However, it should also be borne in mind that in conditions where practically every public company is dissolved and becomes the subject of 'party loot', dominant state ownership and management of NIS is also a problematic solution," Šoškić concluded.
Source: FoNet
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