Message from HE Alex Markovic
Until April 5th 2020 there were 1908 cases positive on coronavirus COVID-19 in the Republic of Serbia and 51 deaths. A total of 1,082 patients are hospitalised, 98 of whom are on ventilatory support, while a total of 7, 360 persons have been tested. The government has decided that flags at all public institutions should be lowered to a half mast until further notice. More than 80,000 citizens are currently in self-isolation and that those who do not respect the measure risk their own health as well as that of other people, which is why violators are sentenced to up to three years in prison.
Despite a coronavirus crisis affecting all world economies, Fitch Ratings affirmed Serbia’s BB+ credit rating with a stable outlook for further improvement. The Agency estimated that the well-balanced budget for 2020, the fiscal discipline of the government of Serbia and the amount of deposits, provide ample fiscal space for post-crisis response. Serbia’s rating is more resilient to the shock caused by the coronavirus, owing to the low impact of tourism on the economy, increased foreign exchange reserves, the positive effects of lower energy prices and the moderate participation of non-residents in public debt. It is also good that inflation remained low and stable at 1.9 percent in February. The significant and constant decline in the share of general government debt in gross domestic product is estimated very positively. The commitment of the Serbian government to maintaining the continuity of current economic policy, as well as the successful implementation of structural reform measures, is particularly emphasized, which the agency cites as key factors for increasing the credit rating in the forthcoming period, the Fitch Ratings statement said.
The government of Republic of Serbia prepared a set of economic measures to mitigate consequences of the coronavirus epidemic to the economy worth €5.1 billion, which is a half of the total annual budget, bearing in mind that the crisis is expected to last three months. This set of measures has two goals – to keep jobs and help those who are hardest hit, and that is the private sector, sole proprietors, micro, small and medium-sized enterprises, as well as to help the economy go through the crisis as painlessly as possible with a massive assistance programme.
The objective is to keep production capacities unharmed, not to close factories and lay off workers and that companies go back to the level of production that they had only one month ago. The measures from the assistance programme came into force on 15 March and underlined that foreign companies confirmed that they will not change their business plans in Serbia. The set of economic measures includes a total of nine measures – three are fiscal policy measures, two are direct assistance to the private sector and measures to preserve the liquidity of the economy, and other measures include a dividend moratorium by the end of the year and fiscal stimulus – that is, a direct assistance to all citizens of legal age. Also, all Serbian citizens of legal age will receive direct assistance in the amount of €100 (~ R2000).
The announced set programme will be financed in three ways: from the substantial budgetary reserves, from budget appropriations, as well as from the domestic and international capital markets. Serbia will go with massive liquidity support for our entire economy system, the private sector primarily, for which we will allocate €2.2 billion (~ R44 billions). We will invest €200 million (~ 4 billions) through a development fund for subsidised, cheap loans, with one percent interest for entrepreneurs, micro, small, medium-sized enterprises, farms and cooperatives. The state is also planning a guarantee scheme that is negotiated with commercial banks in the amount of €2 billion. There will be loans backed by the state, i.e. loans in which banks do not have high risk, which is important because entrepreneurs, micro, small and medium-sized enterprises will also receive this money for working capital, for liquidity. The state will pay entrepreneurs, sole traders, micro, small and medium-sized enterprises three minimum wages to help them overcome the crisis caused by the coronavirus. In addition, the state will pay directly to the account a little more than €750 (~ R 15.000) to each employee of these companies. the state also proposes support in the amount of 50 percent of the minimum wage for employees of large enterprises who have received a decision on termination of work, because according to the Labour Law, when a decision on termination of work is given in large enterprises, the employer has an obligation to pay 60 percent of the average gross earnings over the past 12 months.
There are around 900,000 people working in the sector of micro, small and medium-sized enterprises and entrepreneurs. Within the framework of the tax policy, the state has adopted three measures to support the economy, which mean that it will bear the costs of the enterprises in the amount of €1.3 billion (~ R 26 billons). These measures are: deferral of payment of payroll taxes and contributions for all private companies during the state of emergency, and for a minimum of three months, deferral of payment of income tax for the second quarter of 2020 and exemption from VAT for all those who donate and deal with donations. The state will also assume the payment of taxes and contributions on wages and thus it wants to encourage companies to keep all their workers and not lay off anyone. Government will give all private companies the ability to pay these obligations in 24 equal monthly instalments, but not before January 2021.
Until April 5th 2020 there were 1908 cases positive on coronavirus COVID-19 in the Republic of Serbia and 51 deaths. A total of 1,082 patients are hospitalised, 98 of whom are on ventilatory support, while a total of 7, 360 persons have been tested. The government has decided that flags at all public institutions should be lowered to a half mast until further notice. More than 80,000 citizens are currently in self-isolation and that those who do not respect the measure risk their own health as well as that of other people, which is why violators are sentenced to up to three years in prison.
Despite a coronavirus crisis affecting all world economies, Fitch Ratings affirmed Serbia’s BB+ credit rating with a stable outlook for further improvement. The Agency estimated that the well-balanced budget for 2020, the fiscal discipline of the government of Serbia and the amount of deposits, provide ample fiscal space for post-crisis response. Serbia’s rating is more resilient to the shock caused by the coronavirus, owing to the low impact of tourism on the economy, increased foreign exchange reserves, the positive effects of lower energy prices and the moderate participation of non-residents in public debt. It is also good that inflation remained low and stable at 1.9 percent in February.
The significant and constant decline in the share of general government debt in gross domestic product is estimated very positively. The commitment of the Serbian government to maintaining the continuity of current economic policy, as well as the successful implementation of structural reform measures, is particularly emphasized, which the agency cites as key factors for increasing the credit rating in the forthcoming period, the Fitch Ratings statement said.
The government of Republic of Serbia prepared a set of economic measures to mitigate consequences of the coronavirus epidemic to the economy worth €5.1 billion, which is a half of the total annual budget, bearing in mind that the crisis is expected to last three months. This set of measures has two goals – to keep jobs and help those who are hardest hit, and that is the private sector, sole proprietors, micro, small and medium-sized enterprises, as well as to help the economy go through the crisis as painlessly as possible with a massive assistance programme. The objective is to keep production capacities unharmed, not to close factories and lay off workers and that companies go back to the level of production that they had only one month ago. The measures from the assistance programme came into force on 15 March and underlined that foreign companies confirmed that they will not change their business plans in Serbia.
The set of economic measures includes a total of nine measures – three are fiscal policy measures, two are direct assistance to the private sector and measures to preserve the liquidity of the economy, and other measures include a dividend moratorium by the end of the year and fiscal stimulus – that is, a direct assistance to all citizens of legal age. Also, all Serbian citizens of legal age will receive direct assistance in the amount of €100 (~ R2000). The announced set programme will be financed in three ways: from the substantial budgetary reserves, from budget appropriations, as well as from the domestic and international capital markets. Serbia will go with massive liquidity support for our entire economy system, the private sector primarily, for which we will allocate €2.2 billion (~ R44 billions). We will invest €200 million (~ 4 billions) through a development fund for subsidised, cheap loans, with one percent interest for entrepreneurs, micro, small, medium-sized enterprises, farms and cooperatives.
The state is also planning a guarantee scheme that is negotiated with commercial banks in the amount of €2 billion. There will be loans backed by the state, i.e. loans in which banks do not have high risk, which is important because entrepreneurs, micro, small and medium-sized enterprises will also receive this money for working capital, for liquidity. The state will pay entrepreneurs, sole traders, micro, small and medium-sized enterprises three minimum wages to help them overcome the crisis caused by the coronavirus. In addition, the state will pay directly to the account a little more than €750 (~ R 15.000) to each employee of these companies. the state also proposes support in the amount of 50 percent of the minimum wage for employees of large enterprises who have received a decision on termination of work, because according to the Labour Law, when a decision on termination of work is given in large enterprises, the employer has an obligation to pay 60 percent of the average gross earnings over the past 12 months. There are around 900,000 people working in the sector of micro, small and medium-sized enterprises and entrepreneurs. Within the framework of the tax policy, the state has adopted three measures to support the economy, which mean that it will bear the costs of the enterprises in the amount of €1.3 billion (~ R 26 billons).
These measures are: deferral of payment of payroll taxes and contributions for all private companies during the state of emergency, and for a minimum of three months, deferral of payment of income tax for the second quarter of 2020 and exemption from VAT for all those who donate and deal with donations. The state will also assume the payment of taxes and contributions on wages and thus it wants to encourage companies to keep all their workers and not lay off anyone. Government will give all private companies the ability to pay these obligations in 24 equal monthly instalments, but not before January 2021.
The whole world is in a complex situation. This is a global disaster. It is all about the crisis we are facing, and we will have to address it in the months to come. We are in the middle of a turning point in history, living through a paradigm shift moment. A pneumonia outbreak caused by the COVID-19 virus has shown us all how humanity can come together in times of crisis. In these difficult times around the world Republic of Serbia offers South Africa its sincere messages of fraternal solidarity. We also affirm our optimism to overcome this crisis and to fight this danger that threatens both our countries. We sincerely hope that we will soon resume our activities aimed at spreading the rise of our economies. South Africa seems to have acted faster and more efficiently than many other countries around the world. President Cyril Ramaphosa has emerged as a formidable leader imposing tough restrictive steps and galvanizing support from the private sector. In this fight against the COVID-19 pandemic, for Serbia and South Africa both surrender is not an option, surrender has never been an option, and it will not be an option. We both are fighting the pandemic and we both will succeed.
