Most of the Serbian political opposition claims that a new arrangement with the International Monetary Fund will turn Serbia into an economic colony.
This 30-month-long agreement with the IMF, called Policy Coordination Instrument (PCI), is dubbed by the Democratic Party of Serbia (DSS) as “spendthrift” and by the Dveri Movement as “Serbia, a house for sale”. The Serbian left also points out that the government is selling „family heirloom“.
Dveri points out that, according to the agreement with the IMF, Serbia committed itself to privatize PKB, Petrohemija, Komercijalna Banka, and Kikinda Methane and Vinegar Complex (MSK), as well as increase the electricity price, and transform the state electricity provider Elektroprivreda Srbije (EPS) into a joint stock company, which is only the first step in the sale of EPS.
„After this agreement, Serbia is definitely becoming a colony for foreign capital that will rule our country and turn it into a country of cheap labour and general poverty“, the representatives of Dveri say.
The DSS also believes that Serbia will be permanently transformed into an economic colony through privatization of state companies, of which some have strategic significance. The DSS adds that the arrangement with the IMF is only a validation that “the Serbian government does not lead an independent policy but is an extended arm of the IMF, a big-money protector and promoter of a failed neoliberal development concept.”
Of course, the head of the IMF’s office in Serbia, Sebastian Sosa, argues the contrary. He says that by privatizing or declaring bankruptcy in certain state-owned companies, the Government of Serbia will resolve the burning issues in those companies and release the state funds that were, in the past, given to these companies and which now could be spent on bolstering public investments.
Experts point out that this package entails implementation of difficult structural reforms, primarily in the public sector and state-owned companies.
Economist Ljubomir Madžar says that it is good news that the situation with public enterprises will be cleared our, and adds that it is about time for them to stop being funded by the state.
„All previous arrangements with the IMF were good, and our economic policy was better in those times. The IMF has always insisted on the financial order, that is, that public finances are free from political influence“, Madžar adds.
Foreign investment advisor, Milan Kovačević says that, besides public companies, there will be another 114 state-run enterprises to deal with which are a huge burden to taxpayers.
According to Kovačević, this arrangement is a modest form of cooperation that suits the SNS. He says that, without a mentor, Serbia would be on a slippery slope again.
„Someone needs to supervise us, because we still don’t have the fully functioning rule of law. Our private sector is rather weak, unprofessional people are in power, and big projects are poorly negotiated“, said Kovačević.
EPS to be privatized in 2020?
Cerain media outlets have reported that the instigation of the bankruptcy procedure in Azotara Pancevo is covered in included in the agreement with the IMF, as a condition for Serbia being granted a new arrangement. The privatization is being expedited, so a tender for the sale of PKB is scheduled for August, and the tender for the sale of MSK and Petrohemija should be launched in September. The privatization of Komercijalna Banka will start in mid-2019 and EPS by 2020. The analysis of electricity price increase in Serbia will have been completed by the end of next month,
Although the new arrangement is considered advisory in princile, it is also binding.
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