Serb Socialist Leader Mulls Offer to Become Next Prime Minister

Serbian Socialist Party Chairman Ivica Dacic is mulling an offer to take the post of prime minister should the former opposition Progressive Party have the chance to form the Balkan country’s next government.

Dacic, 46, was asked by President Tomislav Nikolic, whose Progressive Party placed first in May 6 parliamentary elections, on June 25, he told reporters in Belgrade today. He would he lead a three-party coalition that also includes the United Regions of Serbia and would hold a majority 131 seats in the 250-member Parliament.

The Socialist Party, which placed third in elections, may be thrust back to power for the first time since former strongman Slobodan Milosevic was toppled as the Progressive Party and the second-place Democratic Party of ex-President Boris Tadic remain locked in a dispute about policy and power. Dacic said he and his party leaders are weighing whether to lead or simply take part in the next government.

“It’s not about how many ministries we get, it’s about the strategic interest of our coalition,” Dacic said.

Political leaders have been haggling for eight weeks over who has the right to form a coalition after inconclusive election results. The country needs cash to cover the budget deficit, which ballooned because of the economic slowdown and campaign-related spending. Serbia needs to repay about $1.5 billion in maturing dinar debt by the end of year, with a quarter of that total due next month.

Public Debt

Serbia’s public debt was 51.1 percent of gross domestic product at the end of March, exceeding the debt limit of 45 percent, while the current-account gap reached 17 percent of GDP in the same three-month period, instead of the planned 8.5 percent.

The Socialists and Nikolic’s Progressive Party, which both relied on nationalistic rhetoric to spur the campaign and promised closer ties to Russia, already hold a combined 117 seats. The Socialists first agreed with Tadic’s Democratic Party to work together to form a coalition.

Dacic said that since parliamentary and the presidential runoff that elevated Nikolic to head of state, there has been a “huge tectonic shift.”

“This is a historic chance for our coalition to define its political profile and become one of three most important factors in Serbia,” said Dacic, who was Milosevic’s spokesman between 1992 and 2000, during the violent breakup of Yugoslavia.

Tadic’s Democrats have stepped up pressure on Dacic to make up his mind as the country needs a new government quickly to tackle growing economic problems.

Financing Troubles

The government is finding it increasingly difficult to raise cash in the home market and finance the budget deficit, which has expanded 80 percent to 89.2 billion dinars ($972.15 million) in the first five months, or 7.3 percent of GDP, according to the central bank.

The new Cabinet will need to resume talks with the International Monetary Fund over a $1.3 billion precautionary loan deal suspended earlier this year when it became clear the country would slip on fiscal targets that include keeping the full-year gap within 4.25 percent of GDP.

To contact the reporters on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net Misha Savic in Belgrade at msavic2@bloomberg.net

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

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