July 23 (SeeNews) - Serbia's new government, which the country has been expecting for three months after the centre-right Progressive Party of Aleksandar Vucic cemented its grip on power in early elections, is unlikely to bring in serious changes in economic policy, analysts commented recently for SeeNews.
Following early elections on April 24 Vucic has postponed unveiling the new cabinet several times without clear explanation for the delay.The legal deadline for the formation of the government expires in September.
However, according to analysts, the new government will shy away from any major reforms - something of which investors are well aware - and its lineup will make little change to the economic situation in the country. On a positive note, this means that market turbulence will be avoided and investors, who have chosen to enter the local market, are unlikely to pull out.
"I doubt the expert and reform potential of the current government and I don't think much will change with the new government," economist and university professor Miroslav Prokopijevic told SeeNews.
Vucic, who forced early elections saying he needs to secure broader public support for overdue reforms, garnered 48.25% of the votes, giving him 131 MPs in the 250-seat parliament. The Serbian Socialist Party (SPS), led by deputy prime minister Ivica Dacic, and its partner United Serbia, have 29 seats in parliament, and the Serbian Radical Party (SRS) of Vojislav Seselj has 22 representatives. Seven political formations crossed the 5% threshold for entry into parliament.
"Serbia needs continuity and consistency in economic measures. That is what creates security for investors," foreign investment consultant Mahmut Busatlija commented. Serbia's economy is posting mild economic growth and personnel changes are not the problem, rather the lack of long-term economic policy measures, he added.
Serbia's economy expanded by a real 3.5% year-on-year in the first quarter, after posting 1.2% growth in the previous three-month period, on the back of rising consumption and exports.
In the first four months of the year the country's consolidated budget deficit expanded 21.9% on the year to 26.7 billion dinars ($238.1 million/216.9 million euro).
According to Ljubodrag Savic, a professor at the Belgrade Faculty of Economics, Serbia will continue to have high budget deficit unless it secures a long-term GDP growth rate of at least 5%, reduces the gray economy by half, raises the efficiency of inspectorates and cuts the number of employees in the public administration and public companies.
"I am completely convinced that without new investment and mass export-oriented industrialisation, with the use of modern technologies and reliance on natural resources, Serbia does not stand a chance of catching up with medium-developed countries of the EU anytime soon," said Savic.
(1 euro=123.155 Serbian dinars)