By Bojana Barlovac
Serbia’s new leaders are already at odds with the austerity policies of the head of the national bank.
Serbia’s central bank governor, Dejan Soskic, may lose his job if he keeps on “tightening the [financial] belt” rather than seeking to stimulate growth.
The threatening words came on Thursday from Ivica Dacic, Serbia’s Prime Minister designate, who is about to lead a coalition government of Progressives, the United Regions of Serbia and his own Socialists.
The coalition deal does not mention the future of Serbia’s central bank, but the country’s new leaders have said they want the bank to show more “flexibility” in supporting the economy.
The nationalist-led government has pledged to reform the fiscal sector, curb state spending, and improve transparency in public procurement. However, they have refused to freeze pensions and salaries in the public sector, as the bank wants.
Socialists also say they want the new government to draw on Serbia’s foreign reserves to stimulate the economy, a policy that Soskic strongly opposes.
Jorgovanka Tabakovic, a financial expert in the Progressives, is the new government’s favoured candidate for the governor’s post if Soskic goes.
If it does replace the governor, the government will have shown that it intends to try and influence the workings of the central bank, a rare state institution to have so far preserved its independence while maintaining relative stability in the financial system.
In recent months, the bank has succeeded in getting the annual inflation rate below 3 per cent, a record low.
Soskic, a non-party expert elected as governor in 2010, cannot easily be replaced as his mandate does not expire until 2016.
If he does not withdraw voluntarily, parliament could either change the law on the central bank, or use the existing law to attempt to prove him guilty of “improper and negligent performance of functions and serious mistakes in decision-making”.