Tabakovic: Inflation in Serbia Among the Lowest in Europe

The IMF Mission has praised the resilience of the Serbian economy to the crisis. Still, the World Bank warns that the economic shocks due to the war are already reflecting on the Western Balkans, including Serbia. In the days when the whole world is struggling with a drastic inflation and price increases, the questions are: How stable is the dinar exchange rate and for how long can the value of the local currency be maintained relative to the euro and the dollar?

The governor of the National Bank of Serbia (NBS), Jorgovanka Tabakovic, said on RTS that the country had not reached a double-digit inflation, that it was at 9.1% and that, in that category, Serbia was at the bottom of the list of European countries.

According to her, Hungary is similar, whereas Lithuania, Poland and the Czech Republic have a double-digit inflation.

– This kind of inflation is not accidental or a matter of luck, but the result of our work. We built defense mechanisms whenever it was possible. Between 2017 and 2019, Serbia bought EUR 5 billion, which was enough for us to sell EUR 1.45 billion and preserve the stability during the pandemic, and in 2021, we bought again. Then, when the three crises were combined, the unfinished pandemic, the energy crisis and the war in Ukraine, we had the resources to preserve the relative stability of the exchange rate – Tabakovic emphasized.

She pointed out on RTS that the exchange rate was the most important factor as a kind of an anchor that holds back the inflation and that it enabled them to provide security to the citizens and added that Serbia “handled the biggest crisis period better”.

In March alone, EUR 1.16 billion was spent on defending the dinar.

She noted that, for seven years, the country had had a low, stable inflation and nine years of a stable exchange rate, but that it was not easy to make predictions.

She says that the citizens are feeling the imported inflation, but that the NBS can guarantee stability. She advises citizens that they don’t need to buy euros, because Serbia has preserved trust in the state thanks to the stability of the exchange rate.

– Citizens should save in dinars, because that is an economic calculation, because all the calculations we are making are showing that – Jorgovanka Tabakovic noted.

She reminded that, while the prices of energy sources had been growing everywhere, even above 40% in places, and 18% in America, in Serbia, the price increase was the lowest.

Talking about the freezing of the prices of some basic foodstuffs, Tabakovic said that the aim of freezing the prices of certain foodstuffs was to make sure that the most vulnerable groups were able to buy them.

– Producers complain that they are losing money on those foodstuffs. However, they can’t say that they’re losing, because they will compensate for it on other products – the NBS governor said.

When it comes to housing loans, she notes that the dinar loan rate could increase by 45 to 250 dinars depending on the size of the loan and the length of the repayment period, and she doesn’t believe that there will be sudden increases for euro loans either, as she said for RTS.

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Jorgovanka Tabakovic

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