Photo: Marija Janković"For Serbia, it is not only the unfavorable increase in the price of energy products, but also that Germany, Italy and Austria, our main export markets, but also the countries from which we receive a good part of foreign investments, will be quite affected by the development of events, so that this is reflected in our economy and through the trade and through the investment channel. We will suffer inflationary pressures like everyone else, but in order to defend against higher prices on the international market, it would be good for Serbia to try to maintain all the trade relations it can in these conditions."
Annual inflation in Serbia has reached almost 10 percent, while the war in Ukraine continues to rage for the third month, with, for now, unfathomable economic consequences both for the attacked Ukraine and for Russia, but also for all countries of the world, especially in Europe. During that time, the President of Serbia on television scares the citizens of the world's food and energy shortages, and at the same time another payment of 100 euros for young people begins.
WEATHER: We saw that the NBS did not take any action for a long time, and then in a short time it raised the interest rate by one percentage point. Is that all the NBS could do regarding inflation??
DEJAN SOSKIC: No, there have been omissions since 2013 and especially since 2014. Then we had inflation below the inflation target, with a very low rate of economic growth, even with the recession of 2014, and we still had a high reference interest rate, with the aim of securing a fixed exchange rate. As soon as you have no danger of inflation, and on the other hand you have a slow economic activity, it is a classic situation when it is normal to relax the monetary policy. We did not relax it, because the NBS essentially, but unofficially, switched to fixing the exchange rate. Since the European Central Bank (ECB) embarked on quantitative easing in 2015, all currencies pegged to the euro have had a much easier time maintaining their value against the euro, and there was even a danger of appreciating. Unfortunately, we allowed the dinar to strengthen against the euro.
Therefore, the first failure was that we did not start to lower the reference interest rate in time in 2013, the next failure was that we allowed the dinar to strengthen from 2017 without adequate prior growth in the competitiveness of our economy, now we committed the failure to delay raising the reference interest rate rates, and almost two years ago we made an inadmissible omission by allowing the NBS to buy corporate bonds without the existence of an active secondary market for those securities that would show their fair price. In addition to all that, we have continuously made an omission all these years that the NBS is not actively working on dinarization of the domestic financial system, which would make its basic tool in the fight against inflation, the reference interest rate, more effective.
Read on full interview with Dejan Šoškić in the weekly "Vreme" from Thursday (May 19)
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A black picture and the breakdown of the rule of law subscribeThe archive of the weekly Vreme includes all our digital editions, since the very beginning of our work. All issues can be downloaded in PDF format, by purchasing the digital edition, or you can read all available texts from the selected issue.
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