Republic of Serbia

Economic and Structural Reform Challenges and Achievements

Mladjan Dinkic, Minister of Finance

November, 2005

www.mfin.sr.gov.yu

GDP per Capita (current USD) and Real Growth Rates

2,569

3,200

829

2,938

1,375

1,933

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2000 2001 2002 2003 2004 2005 est.

3

4

5

6

7

8

9

10GDP per capita

GDP growth rates (right scale)

Estimated growth of GDP for the first half of 2005 is 6,1%

Budget Balance, in % of GDP

-5

-4

-3

-2

-1

0

1

2

3

2002 2003 2004 2005

Overal Balance

Primary Balance

Monthly Inflation Rate,February 1994 – September 2005

-10

-5

0

5

10

15

20

25

30

94

,02

94

,07

94

,12

95

.05

95

.10

96

.03

96

.08

97

.01

97

.06

97

.11

98

.04

98

.09

99

.02

99

.07

99

.12

00

.05

00

.10

01

.03

01

.08

02

.01

02

.06

02

.11

03

.04

03

.09

04

.02

04

.07

04

.12

05

.05

Official Reserves, in USD mil.,January 1994 – September 2005

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

5.500

94,0

1

94,0

5

94,0

9

95.0

1

95.0

5

95.0

9

96.0

1

96.0

5

96.0

9

97.0

1

97.0

5

97.0

9

98.0

1

98.0

5

98.0

9

99.0

1

99.0

5

99.0

9

00.0

1

00.0

5

00.0

9

01.0

1

01.0

5

01.0

9

02.0

1

02.0

5

02.0

9

03.0

1

03.0

5

03.0

9

04.0

1

04.0

5

04.0

9

05.0

1

05.0

5

05.0

9

Official Reserves relative to Real Money Supply (M1) February 1994 – September 2005

0

20

40

60

80

100

120

140

160

180

200

220

240

260

280

94.0

2

94.0

6

94.1

0

95.0

2

95.0

6

95.1

0

96.0

2

96.0

6

96.1

0

97.0

2

97.0

6

97.1

0

98.0

2

98.0

6

98.1

0

99.0

2

99.0

6

99.1

0

00.0

2

00.0

6

00.1

0

01.0

2

01.0

6

01.1

0

02.0

2

02.0

6

02.1

0

03.0

2

03.0

6

03.1

0

04.0

2

04.0

6

04.1

0

05.0

2

05.0

6

Official and Gross Reserves relative to Monthly Imports

0

1

2

3

4

5

6

7

8

00.0

1

00.0

3

00.0

5

00.0

7

00.0

9

00.1

1

01.0

1

01.0

3

01.0

5

01.0

7

01.0

9

01.1

1

02.0

1

02.0

3

02.0

5

02.0

7

02.0

9

02.1

1

03.0

1

03.0

3

03.0

5

03.0

7

03.0

9

03.1

1

04.0

1

04.0

3

04.0

5

04.0

7

04.0

9

04.1

1

05.0

1

05.0

3

05.0

5

05.0

7

Official Reserves

Gross Reserves (NBS + banks)

Citizens’ New Savings (in EUR billion)

0,02

0,4 0,40,7 0,8 0,7

0,91,1

1,41,7

2,0

0

0,5

1

1,5

2

2,5

05.10. Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 15.10.

2000 2001 2002 2003 2004 2005

Credit Portfolio of Banking Sector (in EUR billion)

1.31.9

2.2 2.12.5

3.2

4.34.7

0.0

1.0

2.0

3.0

4.0

5.0

Q2 Q4 Q2 Q4 Q2 Q4 Q2 30.09.

2002 2003 2004 2005

Serbia: Exports in USD mill. January 2002- August 2005

100

150

200

250

300

350

400

450

02.0

1

02.0

202.0

3

02.0

4

02.0

502.0

6

02.0

7

02.0

802.0

9

02.1

0

02.1

1

02.1

203.0

1

03.0

2

03.0

303.0

4

03.0

5

03.0

6

03.0

703.0

8

03.0

9

03.1

003.1

1

03.1

2

04.0

104.0

2

04.0

3

04.0

4

04.0

504.0

6

04.0

7

04.0

804.0

9

04.1

0

04.1

1

04.1

205.0

1

05.0

2

05.0

305.0

4

05.0

5

05.0

605.0

7

05.0

8

Foreign Trade Deficit and Current Account Deficit (millions of USD and % of GDP)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2001 2002 2003 2004 2005 est.

0

2

4

6

8

10

12

14

16Trade Deficit (millions)Current Account DeficitC/A Deficit in % of GDP

Regulatory Activity – Laws Adopted by the Parliament

Total Number

of Laws

Financial Laws

included in Total

Adopted in 2002 46 22

Adopted in 2003 47 17

Adopted in 2004 88 43

Adopted in 2005 83 40

In Procedure 41 10

20 guaranties and counter-guaranties issuedLaws on restructuring old debts – London Club, Loan for Rehabilitation, government debt to NBS – adopted

Privatization Results 2002 - September 2005

Tenders Auctions Share Fund Total

Enterprises offered: 90 1,508 639 2,237

Enterprises Sold: 50 1,191 390 1,631

Success Rate: 56% 79% 61% 73%

Employees in Sold Enterprises:

45,736 112,224 69,060 227,020

Selling Price

(in 000 EUR):874,870 534,546 279,293 1,688,708

Total Investments (in 000 EUR):

750,228 141,809 5,902 897,939

Social Program

(in 000 EUR):272,441 - - 272,441

Foreign Direct Investments (USD mil.)

50

475

2,000

1,360

165

966

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2000 2001 2002 2003 2004 2005 est.

Public Debt: Total and Foreign (% of GDP)

118

90

55

44

3228

169

132

90

72

5549

0

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 Est

Foreign

Public (total)

169,3

89,6

49,5

117,6

90,0

55,2

43,7

32,328,2

132,1

71,9

55,3

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

2000 2001 2002 2003 2004 2005 estimatefor end of year

Public (total)

Foreign

Public debt• Significantly lowered external debt

– Paris Club– London Club– Foreign debt/GDP dropped to 55% in 2004, down from 169% in 2000

• S&P credit rating (B+/Stable/B) in November 2004, upgrade (BB-/Stable/B) in July 2005

• Fitch credit rating (BB-/Stable/B) in May 2005

• Total foreign debt US$6.6bln, of which:• Paris Club US$ 2.59bln• London Club US$1.08bln • IBRD US$2.20bln

• Total domestic debt US$4.7bln• FX Bonds US$4.27bln

FFC Bonds yields

Yields on FFC Bonds

0.001.002.003.004.005.006.007.008.009.00

10.0011.00

Av

era

ge

We

igh

ted

Yie

ld

J uly 2003 J uly 2004 J uly 2005

Note: Secondary market rates (in Euro) based on BSE closing price

T-bill discount rates

Average Weighted Discount Rate on 3-month and 6-month T-bills - Summary

10.00

12.00

14.00

16.00

18.00

20.00

22.00

24.00

Jan-

03Fe

b-03

Mar

-03

Apr

-03

May

-03

Jun-

03Ju

l-03

Aug

-03

Sep

-03

Oct

-03

Nov

-03

Dec

-03

Jan-

04Fe

b-04

Mar

-04

Apr

-04

May

-04

Jun-

04Ju

l-04

Aug

-04

Sep

-04

Oct

-04

Nov

-04

Dec

-04

Jan-

05Fe

b-05

Mar

-05

Apr

-05

May

-05

Jun-

05Ju

l-05

Aug

-05

Interest Rates on Long-term Housing Loans (per annum)

0%1%2%3%4%5%6%7%8%9%

10%11%12%13%14%15%

2001 2002 2003 2004 2005

there were no housing loans