Dugalic: Serbia has become a big money laundering machine

Dr Veroljub Dugalić, professor at the Faculty of Economics in Belgrade, was a guest on the Uranak TV programme in which he explained the current inflation trends in Serbia, but also talked about the National Bank of Serbia’s decision to increase the benchmark interest rates to 4.5 percent.

“Simply put, people who have loans will see their instalments increase. How did we end up in this situation? Inflation has become a major problem globally. If inflation is 12 percent, it is not logical for interest rates to be two, three, or four percent. The central banks and the National Bank of Serbia have been increasing benchmark interest rates gradually because large sudden jumps usually cause big shocks. That’s not good. This is happening already for the eighth consecutive time,” Professor Dugalić warned.

He also touched on the subject of the growth of the benchmark interest rate.

“It is difficult to say how high the benchmark interest rate can go because we do not know how high the inflation will be. If the inflation is 30 percent, then the reference interest rate will also increase. If inflation stays at around 12 to 15 percent, the benchmark interest rate will not go up too much. As inflation grows, so does the benchmark interest rate. Looking back, we constantly had the problem with the inflation, more or less pronounced, except in the last few years when it was really minimal,” Professor Dugalić added.

Those who rule the world believe that there is a greater danger from inflation than from the recession that the world economy will experience, says the professor.

“Recession can be dealt with, but once inflation starts, it usually spirals out of control and it is difficult to stop it. The fluctuation of inflation in our country is always stimulated by a large supply of money, that is, an expansive monetary policy, and we did not have that. In this case, it is all about bad competition. Food manufacturers have been taking advantage of the current situation and increasing the prices of their products which, in turn, leads to the overall increase in all market prices. When the price of electricity increases, there is also an overall jump in prices. The time of cheap money is behind us. For now,” said Veroljub Dugalić.

Professor Dugalić also points out that money laundering has become a big problem in Serbia.

“The quick sale of apartments is a special problem, a phenomenon if you will. Very few apartments are bought with the help of loans, that is, most apartments are bought for cash. It would be normal for the Tax Administration to probe apartment buyers and ask them how they came up with 300,000 euros in cash to buy an apartment. Generally, purchase and sale transactions are done with cash. Serbia has become a big money laundering machine. Huge amounts of money are coming from abroad and real estate prices keep growing. All of this was exacerbated by the arrival of Russians and Ukrainians. A lot of money has been brought into Serbia lately and one of the ways to protect financial assets is to invest in real estate,” Professor Dugalić concludes.

(Seebiz.eu, 13.11.2022)


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