Italy is certainly one of the leading economic partners of our country and is one of the most important export markets for Serbian goods
In this interview, the Serbian Minister of Finance, Siniša Mali talks about the business environment in Serbia, the European integration process and the importance of Italian investments for our country. He points out that the Italian investments are extremely important for our economic growth and hope that they will be more of them. “Official figures corroborate this. In the period from 2008 to 2018, Serbia’s export to Italy increased 2.6 times and import 1.4 times. The export to import ratio jumped from 51% to 97%. Italy has been doing business in Serbia for many years now. There are over 400 companies here owned by the Italians, and about 1,300 in which the Italians have an ownership share. Cumulatively, they employ more than 26,000 workers,” Minister Mali says in the interview for InFocus Italy.
In May this year, the Finance Ministry delegation met with the International Monetary Fund (IMF) delegation, led by Jan Kees Martijn. Could you tell us what was concluded and agreed?
-The most important thing is that Serbia’s excellent economic results have been validated, which we have achieved through serious and courageous reforms. The IMF and the World Bank have estimated that our GDP will increase by 20% over the next four years. The goal is to achieve an increase of 7%, as this means a better living standard for Serbian citizens. During its visit, the IMF confirmed the projected GDP growth rate of 3.5% for this year and 4% for the next year. Also, we talked with the IMF delegation about the future indexation of pensions, which is only part of the new fiscal rules that we have been working on. By the next meeting with the IMF mission, which is due to take place in late September or early October, we are most likely to adopt the Swiss model for the pension indexation, because it is the best and most suitable for our elderly fellow citizens. This model implies that pensions are adjusted in relation to the level of inflation and salaries in the private sector, in the 50:50 ratio. We also discussed with the IMF the reform of civil servant salaries, and I expect that the reform will have been fully implemented by mid-next year. Development of capital market was also one of the discussed topics. By the end of this year, we expect to adopt several key laws regarding market and development financing, because, by doing so, we are trying to create bigger opportunities for strengthening our economy. Another topic that we discussed was reforming the Tax Administration, as well as the new Capital Investment Commission, which was recently established, and is a very important subject for the further development of Serbia.ž
Could you tell us something about the Economic Reform Programme (ERP) that will cover the period by the year 2021? What can we expect from it?
– This is a strategic document covering the 2019-2021 period, which helps us, as a candidate for EU membership, to prepare for the participation in the process of economic and fiscal supervision of EU member states. The aim is to reduce the development gap between the domestic and European economy. The programme contains a medium-term macroeconomic framework, as well as a fiscal framework that includes ancillary fiscal policy measures and a detailed presentation of structural reforms that should contribute to boosting the competitiveness of the national economy, increasing economic growth and development, creating new jobs and creating conditions for a better life of all Serbian citizens.
When is online fiscalization going to happen? How big of a cost will that be for shops?
– Fiscalization is one of the Ministry of Finance’s priorities, which is the reason why we are working hard on preparing the draft version of the Law on Cash Registers and relevant by-laws. We are currently analyzing different models in order to find the best possible solution. Our aim is to ensure the implementation of modern technical solutions that will enable the competent authorities to monitor the generated turnover through the fiscal cash register online, and in real time. Among other things, this is required for a more resolute fight against the shadow economy.
What has been done so far on combating shadow economy, and what is yet to be done?
– The aforementioned online fiscalization is just one way to stop the shadow economy, which we have been fighting against for decades. We need to provide better super vision and adequate penalties, but also the relevant measures should not be too repressive because that gives only short-term results in, which is not enough. Reducing the shadow economy, in the long run, can only be accomplished through planning and implementing systemic solutions. The programme we have created may be too ambitious, but we will try to reduce the turnover generated by the shadow economy by about 200 million euro in the next year and to transition 11,000 workers and 9,000 companies from operating in the shadow economy to legal business. Above all, we are going to work unburdening the economy, by reducing the tax burden on salaries, which is going to boost the growth and creation of new jobs. We will do our best to make Serbia a country in which legally doing business is the only right, easiest and most cost-effective option and where the conditions and rules are the same for all.
The new EU budgeting system, covering the period until the year 2027, creates the opportunity for the non-EU countries to have access to EU funds. How important is that for us?
– I am extremely pleased with my recent visit to Brussels, where one of the topics discussed was access to EU funds for non-member countries. I talked about this with EU Commissioner for Budget and Human Resources, Günther Oettinger, who gave us his absolute support for our EU accession efforts and especially praised the excellent results of our economic reforms. The 2018 growth rate is the highest we have had in the last ten years. is a great indicator of these results. As I mentioned earlier, the goal is to achieve even better results and having access to EU funds could contribute to it. These funds could help us to invest heavily in infrastructure, education and health care.
What do you think about the World Bank’s estimate at that Serbia can achieve a 7% economic growth annually?
– As I mentioned at the beginning of this interview, I am absolutely convinced that we can do even better, that our economy can grow more than before and that the World Bank’s forecasts are achievable. Fiscal consolidation and stable public finances are the prerequisites for focusing on growth and we have that now. We are working together with the World Bank and the IMF, on identifying the areas in which growth is possible, as well as on implementing the reforms that will contribute to this. One of the great examples is the IT sector in Serbia. This year, we have allocated 100 million euro for investments in science and technology parks and institutes, but we are also working on boosting economic growth. Investments are crucial for growth since they lead to an increase in the attractiveness and competitiveness of the domestic economy which attracts domestic and foreign investments. As a result, there is higher public spending, that is, higher salaries and pensions. We have been doing our best to try to get as close as possible to EU-level income as soon as possible, which requires faster growth rates.
You recently presented Serbia’s economic results to the members of the Italian-Serbian Chamber of Commerce. How important are Italian investments for our economic growth?
– Italian investments are extremely important for our economic growth and we hope that they will be even more of them. Italy is certainly one of the leading economic partners of our country and is one of the most important export markets for Serbian goods. Official figures corroborate this. In the period from 2008 to 2018, Serbia’s export to Italy increased 2.6 times and import 1.4 times. The export to import ratio jumped from 51% to 97%. Italy has been doing business in Serbia for many years now. There are over 400 companies here owned by the Italians, and about 1,300 in which the Italians have an ownership share. Cumulatively, they employ more than 26,000 workers. Italian companies are one of the biggest employers in Serbia. I presented the Italian-Serbian Chamber of Commerce our plans to relieve the economy, which, with the construction of a road network in Serbia, i.e. capital investments, should contribute to Serbia’s business appeal.
Together with the Health Minister, you went on a working visit to the Italian region of Veneto late last year. During the visit, you exchange experiences and good practices with your Italian counterparts, especially in terms of organization and functioning of the health care system. How did this visit go?
– We had the opportunity to get acquainted with the way the health care system works in the Italian region of Veneto, which was a valuable experience for us because they have the perfect system we are aiming for. They have made great advancements in the application of health information technologies, which leads to shorter waiting lists. All in all, their system is very efficient, while improving our health care system is one of the priorities of the Government of Serbia. Apart from health care, in which segments can our two countries further improve cooperation? The experiences of other countries are always valuable, especially of those countries that keep pace with new technologies and improving the quality of life of their citizens. In addition to health care, Italy has an excellent model for the development of small and medium-sized enterprises, which we would also like to emulate and can cooperate more on. In this sense, they have a perfect model for learning about entrepreneurship and entrepreneurial spirit. Also, we can learn a lot from them by applying valuable experiences in agriculture and modern technologies that are used in this segment.
How important is Italy’s support for Serbia’s accession to the EU?
– We are counting on Italy as a sincere friend of Serbia and we value their sincere input and support on our path to the European Union. We have boarded ‘the train’ that leads to the EU, which carries numerous reforms and changes that should improve the life of Serbian citizens. The support of our friends is crucial on this trajectory because only by improving the legislative framework and having a business climate, we can create an environment in which our children will have a safe and dignified future.