Serbia in crisis over Central Bank
The new Serbian government has suffered a number of setbacks since it pushed through legislation recently to exercise direct control over the Central Bank. The legislation, which will also allow the government to appoint a supervisory board and monitor the bank’s operations as well as appointing the top management of the bank has been widely criticised and led to resignations.
The move by the Serbian parliament led to the immediate condemnation by the IMF, World Bank and European Union. It also led to the resignations of the Central Bank Governor Dejan Soskic and his deputy Bojan Markovic.
Yesterday Standard and Poor’s credit rating agency pushed Serbia’s credit rating down one point to BB- as a reflection if its concern for increased control over the bank by the government in defiance of EU and IMF warnings.
The Serbian parliament has added to the worries of financial markets by appointing Jorgovanka Tabakovic, a senior member of the senior coalition party, the Serbian Progressive Party, to replace Dejan Soskic; suggesting greater political influence in the bank.
Meanwhile a further three members of the Governor’s Council of the Central Bank, Chairman Bosko Zivkovic and members Milojko Arsic and Zorica Mladenovic sent letters of resignation to the Parliament speaker complaining about the new law.
Meanwhile the Serbian Dinar has dropped to 11 points above its historic record low, unemployment has risen to 28.12% (May figures) and foreign debt at the end of May was around €24.19 billion, €186 million higher than the previous month.