"Exchange rate regime remains unchanged"

BELGRADE The National Bank of Serbia (NBS) is not considering changing its exchange rate regime and will keep the current inflation targeting and managed float regimes. This was announced by NBS Governor Jorgovanka Tabakovic on Tuesday in Belgrade. "Exchange rate regime remains unchanged" Tabakovic told Belgrade-based daily Vecernje Novosti that there have been no such pressures as to necessitate a change of the current exchange rate regime. She said that this year's net foreign direct investment in Serbia are expected to total around EUR one billion, and the increase is due to the macroeconomic stability achieved and country risk premium decline, which is a result of the monetary policy and fiscal consolidation measures implemented. The governor stressed the need to ensure a much higher degree of predictability of regulated prices, adding that it will benefit not only the NBS in conducting monetary policy, but also the economy itself in better planning production expenses. “When it comes to public sector salaries and pensions, the government's fiscal strategy has clearly defined the rules for their adjustment” in line with the inflation rate, she added. Tabakovic noted that in the last five months, average monthly inflation rate was between 0.1 and 0.2 percent, which indicates that it should be “back within the bound of the target tolerance band by October.” The governor said that interest rates based on the Serbian dinar can only fall down when the inflation rate is stabilized around a low level. Tabakovic noted that NBS is taking measures to strengthen control of the entire banking sector in Serbia and that banks have been identified whose further operations could jeopardize the stability of the country's financial system. She said that the country's foreign exchange reserves total EUR 11.8 billion, which is “enough to ensure external solvency of the state.” “The NBS uses the foreign exchange reserves exclusively for the purposes of servicing foreign debt and ensuring a smooth functioning of the foreign exchange market,” said Tabakovic. (Beta, file) Tanjug

"Exchange rate regime remains unchanged"

Tabaković told Belgrade-based daily Večernje Novosti that there have been no such pressures as to necessitate a change of the current exchange rate regime.

She said that this year's net foreign direct investment in Serbia are expected to total around EUR one billion, and the increase is due to the macroeconomic stability achieved and country risk premium decline, which is a result of the monetary policy and fiscal consolidation measures implemented.

The governor stressed the need to ensure a much higher degree of predictability of regulated prices, adding that it will benefit not only the NBS in conducting monetary policy, but also the economy itself in better planning production expenses.

“When it comes to public sector salaries and pensions, the government's fiscal strategy has clearly defined the rules for their adjustment” in line with the inflation rate, she added.

Tabaković noted that in the last five months, average monthly inflation rate was between 0.1 and 0.2 percent, which indicates that it should be “back within the bound of the target tolerance band by October.”

The governor said that interest rates based on the Serbian dinar can only fall down when the inflation rate is stabilized around a low level.

Tabaković noted that NBS is taking measures to strengthen control of the entire banking sector in Serbia and that banks have been identified whose further operations could jeopardize the stability of the country's financial system.

She said that the country's foreign exchange reserves total EUR 11.8 billion, which is “enough to ensure external solvency of the state.”

“The NBS uses the foreign exchange reserves exclusively for the purposes of servicing foreign debt and ensuring a smooth functioning of the foreign exchange market,” said Tabaković.