Danica Popovic

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• Danica Popovic
• Faculty of Economics and
• Center for Liberal-Democratic Studies
• After 4 years of transiton in Serbia
• Do reformers prefer party-ownership (POE)
• to enacting reforms?
• Narodna banka Srbije, 21. maj 2005.

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Achievments
2001 2002 2003 2004
GDP growth -
Prices -
Fiscal deficit -
Exchange rate appreciation - -
Privatization -
FDI inflows -
Liberalization of FT - - -
Foreign trade deficit - - - -
Unemployment - - - -
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Main findings

• No transition recession, but no restructuring
  (Lillian measure)
• In 2004, CA deficit reached 13 percent of GDP
• Unemployment 34, wages rising owing to fiscal
  policy and income policies
• Serbia's core inflation doubled in 2004
• FDI inflow slowing down
• Industrial outp. Nominal wages

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Failures

• Stuck in privatization of the state sector with
  155.000 140.000 workers, surplus labor minimum
  30
• Anti-export biased policies (labor law)
• Hard budget constraint still not enforced!
• Reverse in attitude towards liberalization
• Sentimental approach to strikers, volontary
  layoffs (now striking against themselves)

Social, mixed and state ent. Private
Revenues 48 52
Exp. 50 50
Employm 65 35
Assets 71 29
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Political economy of failures

• No incentives for further privatization
• Public eneterprizes (140.000 workers) owned by
  political parties
• source of power and money
• lack of motif for further reforms
• delaying restructuring for as long as possible
• 75 state and socialy owned enterprizes (150.000
  workers) on subsidies and strikes
• The policy of voluntary layoffs, encouraging
  self-employment
• No way out no FDIs attraction
• The new Labor law reintroducig socialism
• Anti-export bias
• No incentives for institutional (icl. judiciary)
  reform
• Losers (incompetent party leaders, low qualified
  labor, state or state-protcted monopolies) taking
  over?

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Recommendations

• Hard budget constraint bancruptcy law still not
  enforced!
• Restructuring public enterprizes
• Lessening motives to keep the ownership
• Regaining momentum i privatization
• Reducing public consumption (and taxes)
• Cutiing subsidies- reducing expenditure
• Implication redundancies rising and
• possible transition recession FDIs and SMEs
• Turning point - Greenfields regaining attention

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Main reccomendations

• Realna depresijacija? Already taking place
• Smanjenje javne potrošnje, ne cekati
  restrukturiranje
• Primenljivost
• Depresijacija se ne preliva u celini u inflaciju,
  dakle, može
• Plate vezati za produktivnost, uz depresijaciju,
  što dovodi do konkurentnih plata
• Institucionalni okvir
• Smanjiti ulogu NBS na deviznom tržištu
• Definisati targete
• Kurs prepustiti tržištu
• Održiv rast zasnovati na domacoj S i I, kao i na
  rastu izvoza
• Zašto MMF odbija mogucnost da devizni kurs
  stabilizuje PB?
• Zbog toga što nije uvedeno cvrsto budžetsko
  ogranicenje (155,000 radnika)
• Zbog javnih preduzeca, 155,000 radnika, koji bi
  bili gubitnici takve politike
• Koji režim je optimalan? Floating? Ako je dirty
  floating, NBS mora da ima cvrsti monetarni
  target, i mora davati jednoznacne prognoze.

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Komentari

• Is the Dinar overvalued? Yes.
• Does this increase the deficit? Yes.
• Prerequisites
• Are there more effective policies
• Smislen rezultat dobijamo samo ako dezagregiramo
  na uvoz potrošnih dobara, repromaterijala i
  kapitalnih dobara. KOLIKI JE DOPRINOS
  PRIVATIZACIJE SUPPLY SHOCK
• Ne sme se zaboraviti nedostatak domace ponude...
  i formiranje nove privredne strukture
• SDI uvoze traže MSP traže nove radnike
  raste domaca proizvodnja i domaca tražnja,
  štednja i investicije. Pokretac je SDI, on hoce
  depresiran kurs
• Zašto izvozna funkcija ne daje statisticki
  znacajne rezultate?
• Zato što je izvoz subvencionisan!
• Iz istog razloga analiza RCA ne daje smislene
  rezultate

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1. Dodati williamson, wb feb 99

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Zakljucci i predlozi reformi
CES MMF Popovic
1. Spoljnotrgovinska liberalizacija nije jedini niti presudni uzrok rasta deficita ? ?, VAT, oprema, beg kapitala zbog cl. 8 konvert.
2. Smanjenje carinske zaštite bilo je moguce neutralisati politikom kursa ? Da, ali je važniji uticaj kursa na SDI i izvoz, a bolje fiskalna politika na plate
3. Depresijacija se samo delimicno preliva u inflaciju ? Lucas, ne mora nimalo, VB, Madarska
4. Treba smanjiti ulogu NBS na deviznom tržištu ? ? Nije transparent.
5. NBS treba da prepusti kurs tržištu ? ? crawling band
6. Plate treba da prate rast produktivnosti, ? u javnom sektoru, Balassa-Samuelson.
7. Javnu potrošnju treba svesti na 41-42 BDP OK ? Koliko je to USD, šta izbaciti, politicka elita
8. Kljucni problem je deficit, lek je kurs, smanjenje javne potrošnje, politika plata dolazi iz javnog sektora, kurs ne, Kurs je strateško pitanje, Izvoz je kljuc, samo 16 BDP, HUN exp 1990 isto, rešenje - koncentracija
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A tough fiscal adjustment has been effected
Fiscal deficit Up to 13 of GDP
Fiscal deficit Up to 3.2 of GDP
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Koliko su visoke naše carine ...
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