Serb Premier Will Also Act as Finance Minister Until Election

Serbian Prime Minister Mirko Cvetkovic is taking over the Finance Ministry in a shuffled cabinet, with the ministry focusing on “development” in the government’s last year.

Cvetkovic will assume responsibilities from Diana Dragutinovic, the only women ever in Serbia to have run the portfolio. While Dragutinovic was a “great expert, this is a special moment when we are entering the last year of this government and a development component must be added to the Finance Ministry,” he said.

Dragutinovic kept Serbia’s fiscal gap under control throughout 2009 and 2010 to meet the requirements under the International Monetary Fund’s bailout loan as the country felt the pinch of the global recession and the government responded with budget incentives to prevent deep a economic contraction.

The economy shrank 3 percent in 2009 and grew an estimated 1.75 percent to 2 percent in 2010.

The country’s major challenge is inflation, already higher than 10 percent, at an annual 11.2 percent in January. The central bank expects inflation to peak in March or April this year, before gradually falling to 6 percent, the upper band of a 3 percent to 6 percent target band for the end of 2011.

Cvetkovic spoke live in an interview with B92 TV channel, after his cabinet issued a statement saying that his shuffled government will have 17 ministries, down from 24, and 21 members of the government.

Living Standard Improvements

Following last week’s pledge to focus on improving living standards in a nation where “between 700,000 and 1 million people are unemployed” and where average wages are no more than 320 euros ($447) per month, Cvetkovic said the government will work out a plan making banks offer longer grace periods for debt repayments to more than 900,000 people.

The debt rescheduling is designed to cut monthly debt repayments by half through new grace periods of up to two years.

“This will simply improve your life. After two years, your monthly installment will return to normal,” Cvetkovic said.

He said the government will not sell Telekom Srbija AD “at any cost. Either we get an excellent price or we do not sell Telekom.” The government has set 1.4 billion euros as a minimum price for a 51 percent stake.

The new law on ministries, needed for the Cabinet shuffle, will be debated by Parliament this week. Cvetkovic will address members of Parliament on Tuesday with a new program. The new law on ministries will “restrict ways in which members of the Cabinet will communicate with media,” Cvetkovic said.

To contact the reporters on this story: Gordana Filipovic in London at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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