Jelasic: Populism is the greatest threat to the new governor

The biggest threat to the new governor will be populism in relation with expectations of monetary policy, said Radovan Jelasic,Governor of the National Bank of Serbia in resignation in an interview for the new issue of NIN.

The second danger according to Jelasic is subsidizing programs from which no one knows how to get out, and as the third the current unfavorable macroeconomic situation in the world, particularly in countries that are key export markets of Serbia.

Jelašić said that it would be very important that the government slowly withdraws from subsidizing.

- I am mostly concerned because the government, as I said, entered the second half of its mandate and that it is unlikely that it will show a willingness for radical reforms when it hadn't already showed at the beginning - says Jelasic.

Explaining the idea of de-eurozation Jelasic notes that dinar interest rate can not go under 11-12%, for how much the state is currently in debt.

- But when you have strengthening of the dinar on one side and the increase in nominal wages, on the other side, as it was in the mid-2006 until September 2008, of course people say: "What is this governor talking about when he says to go for dinar loans when euro and swiss currencies are much more profitable." A monthly installment in "swiss curency" is today higher by almost 50%. Clearly, dinar will not solve all our problems, but we can significantly reduce pain when the next crisis comes, and there will be another one for certain - explains Jelasic.

Jelasic says that it has proved that in Serbia the prices are determined by supply and demand, and much less by exchange rate.

Summarizing the results of his work, Jelasic said that in NBS they reduced the number of employees by 60%, while others were increasing the state administration.

- If it weren't for NBS, even today we wouldn't be on the white Schengen list, since we would not have passports - concluded Jelasic.