- Premier Vucic's Progressive Party may win outright majority
- Vucic plans to overhaul economy, prepare Serbia for EU entry
Serbian Premier Aleksandar Vucic is poised to easily win Sunday’s snap elections, securing a new four-year term to push through an economic overhaul and bring the country closer to joining the European Union.
A former ally of Slobodan Milosevic, who led Serbia during the bloody 1990s breakup of Yugoslavia, Vucic and his Progressive party are now trying to prepare the Balkan state of 7.2 million people for EU membership by the end of the decade. He called the parliamentary ballot two years into his four-year term to give himself breathing room for reforms that previous governments have struggled to tackle in the face of popular opposition.
“I wouldn’t expect miracles,” said Roxana Hulea, a markets strategist at Societe Generale SA. “But with, presumably, a new four-year mandate the Progressive Party should be able to focus on the medium term and be less fearful about an imminent social backlash.”
If he wins, Vucic, 46, will consolidate his vision of retooling one of Europe’s poorest economies and lift living standards closer to those of richer Western states and former Yugoslav partners Slovenia and Croatia, who are now in the EU. After years of political foot-dragging and public opposition to economic change, he’s facing off against resurgent nationalist candidates, including acquitted war crimes suspect Vojislav Seselj, who advocates shunning the EU and boosting ties with Russia.
Vucic’s Progressive Party had 50.6 percent support from voters, according to a mid-April phone survey by Belgrade-based polling agency ProPozitiv. Foreign Minister Ivica Dacic’s Socialists were second with 11.4 percent and Seselj’s ultranationalist Radical Party had 8.2 percent. Four other opposition groups are close to the 5 percent threshold required to make it to parliament.
Serbian dollar bonds have gained under Vucic’s tenure. The yield on the debt maturing in September 2021 fell to 4.499 percent at 9:31 a.m. on Friday, compared with 5.593 percent before he won his first term in March, 2014. Meanwhile, the dinar has weakened. Despite being supported by 725 million euros ($818 million) in central bank interventions this year, it traded at 122.879 to the euro, compared with 116.012 before the 2014 ballot.
Serbia is one of Europe’s last ex-communist nations to embark on a wide-scale retooling of its economy, long after others including the Czech Republic and neighboring Hungary made the full switch to a market-based approach. With purchasing power at 37 percent of the EU average in 2014, the country has promised the International Monetary Fund it will rid the state balance sheet of more than 500 state-owned companies that drain as much as $1 billion from state coffers each year.
That will unencumber fiscal policy makers wrestling to bring the country’s budget deficit to below the EU’s allowed ceiling of 3 percent of economic output from 3.7 percent last year. The IMF says the steps are needed for the faster economic growth Serbia needs to catch up with its richer neighbors. Serbia’s economy will expand 1.8 percent this year, the least in southeast Europe, according to the World Bank.
Proclaiming “you are either for the past or for the future” in an election ad, Vucic is distancing himself from the years when he was Milosevic’s information minister and a top-ranking member of Seselj’s Radical Party, which was famous for nationalist rhetoric during the wars in the former Yugoslavia. Milosevic died in detention in The Hague in 2006.
Vucic is gambling the 158 seats he now controls in the 250-seat parliament as a third of Serbs feel that they are “transition losers,” according to a poll this month from the Center for Free Democracy and Elections. Even if he achieves his plans, Serbia still has work ahead of it, said Milojko Arsic, the head of the Belgrade-based Foundation for the Advancement of Economics.
“Once completed, Serbia will have privately owned companies, but it will also need functioning institutions and a restricted budget,” Arsic said. “We will very much resemble a Latin American economy, with some aspects of a market economy and lots of work ahead to achieve a functioning market economy as defined by the EU.”