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
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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)

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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 potronje, ne cekati
  restrukturiranje
• Primenljivost
• Depresijacija se ne preliva u celini u inflaciju,
  dakle, moe
• Plate vezati za produktivnost, uz depresijaciju,
  to dovodi do konkurentnih plata
• Institucionalni okvir
• Smanjiti ulogu NBS na deviznom tritu
• Definisati targete
• Kurs prepustiti tritu
• Odriv rast zasnovati na domacoj S i I, kao i na
  rastu izvoza
• Zato MMF odbija mogucnost da devizni kurs
  stabilizuje PB?
• Zbog toga to nije uvedeno cvrsto budetsko
  ogranicenje (155,000 radnika)
• Zbog javnih preduzeca, 155,000 radnika, koji bi
  bili gubitnici takve politike
• Koji reim 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 potronih 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 trae MSP trae nove radnike
  raste domaca proizvodnja i domaca tranja,
  tednja i investicije. Pokretac je SDI, on hoce
  depresiran kurs
• Zato izvozna funkcija ne daje statisticki
  znacajne rezultate?
• Zato to je izvoz subvencionisan!
• Iz istog razloga analiza RCA ne daje smislene
  rezultate

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• Dodati williamson, wb feb 99

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Zakljucci i predlozi reformi
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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 nae carine ...
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