16/11/2005
In response to an invitation of Bundesbank officials, NBS Governor Radovan Jelasic visited Frankfurt today, where he met Bundesbank President, Mr. Axel Weber, and Vice President, Mr. Jurgen Stark. Their talks centred on technical cooperation between the two institutions and the future assistance of the Bundesbank to the Serbian central bank. The Governor also paid a visit to the Cash Handling Centre with a view to becoming acquainted with positive experiences which, if applied, could enhance the efficiency of the NBS’ operations.
In his presentation to the Bundesbank management on the results of reforms implemented in Serbia, Governor Jelasic placed emphasis on the need to accelerate structural reforms and take drastic measures in order to suppress inflation, even if this means lower economic growth in the following year, so as not to undermine the achieved macroeconomic stability and in order to ensure long-term sustainable economic growth. In addition, Mr. Jelasic pointed out, what Serbia needs is a uniform strategy of further public sector restructuring so that indispensable reform moves in respect of strategic issues would not be hindered by short-term, daily political interests.
The NBS Governor believes that a new arrangement with the International Monetary Fund should be concluded in the shortest possible time, which would certainly help Serbia to successfully complete this and the following stage of transition. With or without an arrangement with the Fund, however, transparent reform work must be continued, said the Governor, adding that the readiness of the Government and other economic decision-makers for this kind of work will be “put to test” already early next year, if the current IMF arrangement is successfully completed.
-When it comes to inflation, it should be known that each further move the NBS makes with respect to monetary policy restrictiveness entails the containment of lending activity, higher interest rates and higher costs of money sterilization. However, in a country such as Serbia, where inflation had had such detrimental effect and left staggering long-term consequences on the economy and the society as a whole, this must be done, whatever the price. The National Bank of Serbia will take all measures required to subdue inflation, but in order for the adverse ramifications of such measures to be minimized, all other economic policy makers must have one and the same overriding objective – bringing inflation down, Mr. Jelasic stressed.
NBS Governor’s visit to the Bundesbank represents the continuation of a successful cooperation between the two institutions, as part of which the Bundesbank organized a one-week seminar this summer for 20 employees from the National Bank of Serbia, who thereafter visited German commercial banks as well. The Bundesbank has already offered further professional cooperation and training in the form of a similar arrangement which is to take place in the first quarter of the following year.
Press Release from Governor’s Cabinet
