Tabakovic: Inflation within target limits, GDP at around 1%

BELGRADE - Inflation rate has been within the limits of the target rate since October 2013, and we are on the right path to preserve the inflation rate at 4 per cent in the mid-term period, Governor of the National Bank of Serbia (NBS) Jorgovanka Tabakovic stated in a release.

The GDP growth will total around 1 per cent by the end of the year, Tabakovic said at a news conference during which the Inflation Report for May 2014 was presented.

In the short-term period, negative effects will come from the announced fiscal consolidation and structural reforms which are necessary for a sustainable economic growth and this is one of the reasons why the economic growth will be somewhat lower, she said.

The governor expressed the belief that the talks between the Serbian government and the IMF would begin in late May, noting that Serbia does not need a new arrangement for strengthening of its foreign currency reserves, but it needs a precautionary arrangement as a mode of support to the announced structural reforms and strengthening of the foreign investors' trust in Serbia.

Commenting on the announced subsidised loans worth EUR 1.2 billion, Tabakovic said that the funds should not be used for payment of overdue debts and should instead be invested in small and mid-size companies.

She underscored that NBS is ready to back government measures because they point to the determination in the implementation of fiscal consolidation, which was also recognised by foreign and local investors. She noted that Serbia expects an arrangement with IMF to be closed which would contribute to strengthening of foreign investors' trust in Serbia.

Foreign investments in 2014 totalled around EUR 200 million and the beginning of the...