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News 19 Nov 14

Serbia PM Defends Economic Ties to Russia

Prime Minister Vucic said that while Serbia's political focus remains on EU integration, economic interests necessitate continued close ties to Russia.

RTS
Belgrade

Aleksandar Vucic has reiterated that while Serbia’s strategic goal remains EU membership, its economic interests mean it cannot join EU sanctions imposed on Russia.

“Our entire foreign policy is based on how to attract investment and improve the economy,” Vucic told Serbia's public broadcaster, RTS.

He expects Serbia to start accession negotiations with the EU in December, adding that Serbia hopes Brussels will respect the reforms it is implementing and will understand Serbia’s neutral position on the crisis in Ukraine.

Serbia has said it respects the territorial integrity of Ukraine, but still wishes to maintain good relations with Russia.

Serbia's naunced position has caused concern among some EU states, such as Germany, but Vucic said Serbia was in “no position to impose sanctions on Russia and I do not think it would be good for Serbia”.

Vucic said Serbia would lose significant amounts of money that would not easily be compensated if economic cooperation with Russia halted.

He said foreign investors in Serbia were interested in its free trade agreements with the EU, Russia, Turkey, Belarus, Kazakhstan and other countries.

Talking about relations with neighbours, Vucic said Serbia sought stability and peace as fresh disturbances in the region would only pose new problems for Belgrade.

The Prime Minister also said the economy was heading in the right direction.

“We have a plan, a programme acknowledged by the IMF, World Bank, the EBRD, and according to their conservative assessments we will have 1.5 per cent growth in 2016 and up to 2 per cent in 2017,” he said.

Vucic added that economic growth might be even higher as a result of the privatisations of big public companies.

Serbia had launched difficult reforms including cuts in public spending and reform of public companies and the state administration, he noted.

A revised budget introduced cuts to pensions and salaries in the public sector as of November 1. Previously, the government raised VAT from 18 to 20 per cent.

According to Vucic, Serbia does not plan new increases in tax. “Croatia has 27 per cent VAT, Hungary has 25 per cent, so ours at 20 per cent is the lowest in the region. We do not intend to increase it. Measures have already been adopted. We want to create the best possible business environment,” Vucic stated.

The Prime Minister stated that Serbia was is close to reaching a deal with the IMF, whose representatives are now negotiating a new loan with the Serbian authorities.

The IMF suspended its last precautionary loan programme with Serbia in February 2012 when Belgrade stopped meeting agreed targets on spending and public debt.

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