After all, the president can do everything by himself: he distributes money from helicopters, he buys ventilators on the cheap and defeats foreign agents who would want to steal these ventilators at the airport, he distributes vitamin supplements to pensioners, he orders the price of fuel to go into reverse, he brings in investors and he pays them with public money, he calls Siniša Malog to see if there is 9 million in the budget for the power network somewhere in Sjenica; he was the one who sold Telekom, so he didn't sell it, then he regretted it, and then he stopped regretting it; he wanted to eat himself alive because he didn't remember that we were building highways on a concession basis, he controls the goods reserves that have everything, but then it was found out that some warehouses have a double bottom...
That is why the first question for Danica Popović, a professor at the Faculty of Economics, was: what should the process of borrowing by a state look like, how should it be done?
DANICA POPOVIC: According to the Constitution, the president of the country is forbidden to do that, and he has violated that Constitution many times, which would probably be punishable if this was an organized country. We are not even a semi-democracy anymore, anything is possible here. How it should be done is an unnecessary question, because anyone who would ask that question would never appoint Grcic as the general director of EPS. Vučić has declared autocracy in every respect, he decides who he will hire and who he will fire, how much money he will take and throw away, and it will be as he pleases. That is today's Serbia. It is obvious that the money is necessary, but I doubt that the 3 percent interest rate is preferential. The benchmark interest rate in the US is now around 2,5 percent, so why would three percent be preferential?
"VREME": Vučić said that we cannot borrow on the market even at an interest rate of 7,5 percent.
This would mean that the lender believes that the borrower will almost certainly not repay the debt. Our debt is below 60 percent of GDP so I think that story is one of those fog sales. There is a book by Professor Harry Frankfurt, called "On Bullshit", which talks about exactly that. It is a way of speaking, selling a fog that aims neither to tell the truth nor to lie, but only to glorify the one who speaks. With fog sellers, you don't even know if what he said is true, and it doesn't matter if it's true, and even when he's lying, it doesn't matter if he's lying. That is why it is terribly difficult to discuss economic topics.
One of the topics that is certainly talked about is inflation - we have already passed 13 percent.
That's a big problem. In two issues of the "New York Times", Paul Krugman has already analyzed how inflation in America is calming down and, not only stagnant, but also falling - it was over 9 percent, now it is slowly falling to 8. This shows that the America we swear will is the primary source of our inflation, by the end of the year it will end at 4-5 percent, and we, as their "innocent" accomplices, will reach about 20 percent.
Do you think it will go that far?
Vučić said two months ago that inflation will be 20 percent this year, and at that moment all those who make financial decisions took that into account. And the market doesn't look at the fog that he sells, but counts that there will be so much. I don't think it can be any lower than that and I hope I'm wrong.
Where is the way out of such inflation?
The first problem for us is the governor of the National Bank, who never had close and successful contacts with that job, and all these years the sea was calm for her. Any captain will bring a ship into port if there is a calm sea, but a good or even a qualified captain will show himself only when a storm begins. What had to be done now would require not only her knowledge - because she is not the only one in the NBS, so let's say that everything depends on her - but on how much she can apply any of the necessary measures. The first and basic one is to start a decisive increase in the interest rate - much higher than it is now and long before the NBS started it.
Second, this exchange rate must be discontinued. You had the euro for 117 dinars six years ago, and during that time prices in this country rose by 30 percent, which means that in Serbia the euro depreciated by 30 percent. This means that no exporter wants to export from Serbia - why would he, when every time he exports he gets a smaller amount of money, and everything he needs to buy with dinars will be more and more expensive. Such a policy is not smart, it is not good and it is not aimed at economic growth, nor for anyone who could make decisions and drive economic development in this country.
So who is left? EPS remains, which exported electricity, so they ruined it. Srbijagas and other state companies remain, on which we will begin to depend. We are starting to look more and more like Russia, except that we don't have oil - that's our handicap. In this country, no one is allowed to write, no one is allowed to make a decision, and then you depend on some state-owned companies in which archincompetents sit. It is an obvious message: I will say who will be the director. Now Godzilla can come to be a director in EPS, he won't make much of a difference compared to the previous director.
Is that the harm of that voluntarism? And is it only EPS?
If it was just EPS or just the economy, we would somehow survive. But what happened a month ago shows that even the Constitutional Court no longer exists - Siniša Mali received a blessing for his plagiarism. I heard that he will submit a request to the University to return his doctorate. And all this without a single word - we did not hear him defend his doctorate in some way in public. It happened to me that I was falsely accused of plagiarism, so you couldn't keep quiet from me, I asked everyone to come forward, to bring proof, so if anyone succeeds, I will withdraw. But nobody showed up, because they are mice.
Did you see what eventually happened to that then student who accused you of plagiarism? He became the director of the City Housing Company and youth commissioner of the Belgrade SNS board.
Blessings to the youth of SNS. I don't think about that person, because there are two basic rules in the life of an intellectual, which I adopted a long time ago. It's one thing that you have to check what you're saying. Just because you like something doesn't make it true. Another ethical principle is that hatred is a disease. But let's go back to the plagiarism of Sinisa Mali. Those are all Vučić's cockroaches. Who will be in the new government? It doesn't matter who will, there will be some cockroaches. Why do I call them that? Because when the light comes on, they disappear.
For ten years, you know nothing about what any minister thinks about any measure from his department. And when something needs to be said from that department, He will say it, because He is the master of cockroaches, and He protects them and does not give them away. They can trample anyone they want on the toll ramps, they can take drugs and have the dogs sniff them, but Vučić won't allow them, and they know they are cockroaches and behave that way.
Let's go back to the economy... How much does such a policy and such a system cost us, in which one man decides that tomorrow he will give money to young people, pensioners, everyone, and that has no economic basis?
The people know very well that he is a seller of fog. If you asked them half an hour after his speech what Vučić said, they wouldn't know how to repeat it, except for a few things: when will the salary increase and when will the pension increase. Here he sticks to the facts and does not sell fog. He says exactly what he says and in most cases fulfills his promise. He gave all that money from the helicopter out of our pocket and got into debt and gained political points for that. And that, when he will give the money, he probably solves that question himself. We witnessed that he said it would be 5000 euros per newborn child, so the next day he changed it to 3000 euros. Apparently, after that speech of his, Sinisa Mali said something like "boss, it's too much, reduce it".
So I can't say that there aren't some corrections, some feedback from the government, but so small and so pointless that we can't go far. And this constant question of yours is how much it will cost us... It will cost us the new 50.000 young people who will leave Serbia every year. So when you multiply how much they could earn, how much they could export, how much they could make Serbia a better place, well, that's how much it will cost us. How much it costs financially is less important, that money is recoverable.
For now, fortunately, the influence that Angela Merkel exerted on Vučić seven or eight years ago, when she forbade him to take on more debt and ordered him to reduce his pensions, is still valid. Then Angela Merkel had had enough of Greece and that they can do what they want, and then Danish or Lithuanian pensioners pay high pensions to Greek pensioners. Then Vučić got lessons from both Schäuble and Angela Merkel, and he stuck to it for a long time.
He seems to have abandoned that approach in the last two years.
He does, he turns around, but he quickly comes back, and it seems to me that those lessons still hold him back in what he could do.
A new agreement with the IMF is announced. Let's remember that two years ago, Serbia did not want to take money from the IMF, so it borrowed two billion with an interest rate of over three percent. What will the agreement mean for Serbia?
This will mean that we no longer have anyone to take money from. We used to take from the Russians or the Chinese, but now we can't because of the war, or it's not that popular.
What will the IMF ask of us?
They will ask us to close the account with a fiscal deficit of 3 or 4 percent. Since we will obviously have a deficit many times larger, it will be a huge problem. Then more serious financial corrections will have to be made. In the first round, pensions and salaries will certainly not suffer, but in the second round they will, as their increase will be prohibited, and they will be eaten up by inflation.
When it comes to inflation, it seems that monetary and fiscal policy are at odds - the NBS raises the reference interest rate, reduces pressure, and Vučić distributes money to pensioners, young people, raises pensions and salaries... Where does such a policy lead?
To Vučić's Serbia. I would be surprised if it ever becomes different, until someone orders him like Merkel did back then. The proof of my claim that everything that has been done well since the reforms came from abroad is the fact that nothing else has been done. No departmentalization or arrangement of public enterprises. And I don't think he can lead this country in any other way. What else does he have to offer the electorate?
Vučić is voted for by those who receive some benefits or those who get the right to bully people below them, when they become heads of various public companies or local companies, which we can see in the example of the girl who lost her place in kindergarten in Pećinci. That's what he offers to his electorate, and he has to finance it, he has to pay them. Either they will be paid by workplaces, or they will increase the pensions of pensioners as much as possible, and that costs money.
And how long can it go on like this?
This can be done until you reach 80 percent of debt to GDP. After that, the IMF will sound a loud siren and after that we will not be able to borrow, which will mean that Serbia is a day before bankruptcy. He can do that. When will that happen? If it continues at this pace, it could come in a year.
For the first time since 2014, our balance of payments deficit is not covered by foreign investments, but is smaller.
It's a terrible problem. Foreign direct investment is one of our biggest strategic economic instruments. In theory, they give access to foreign markets and bring technology, and they also bring management. It is our tragedy that foreign investors bring such primitive technology that we do not have any technical progress, but we have one very important thing, which is the basis of our monetary stability, and that is the inflow of foreign exchange every year that keeps the euro exchange rate at 117 dinars. The moment foreign investments disappear, forget about the exchange rate of 117 dinars to the euro, and that is a huge problem for the country, which today costs 30 percent less foreign exchange liabilities than they cost it three years ago.
That is the biggest problem, and it again leads us to the biggest risk outside of the economy, which is Germany, which politically will insist that we impose sanctions on Russia, probably recognize Kosovo - everything from that list of theirs. And if we are not obedient there, there will be no such investments, because German businessmen are very attached to the state, they carefully listen to and respect the instructions of their state. If that happens, then we are in huge trouble.
The economy mostly complains that the exchange rate of the dinar favors importers. However, if the dinar starts to fall in relation to the euro, then loan installments in dinars increase for everyone, in which we all pay at the end of the day.
I agree. But imagine that you are the president of the country. What is your goal? Your goal is economic growth, for the country to progress. If the country progresses, people will receive better treatment, pensioners will have more money, education will be better. When you look at it from that focus, you immediately understand that someone has to earn it, in order for there to be economic growth. Do importers lead to economic growth? No. Do pensioners lead to economic growth? No. When you look at it, those for whom it is convenient for the exchange rate to be fixed are the consumers, those who do not earn money. ¶
