Bloomberg News

Serbia’s Tadic Still Deciding on Whether Seek to Be Premier

May 25, 2012

Former Serbian President Boris Tadic, a pro-European Union politician defeated by nationalist Tomislav Nikolic on May 20, hasn’t decided yet whether he will seek to become the country’s next prime minister.

Tadic’s Democratic Party held talks today after losing to Nikolic’s Progressive Party in a May 6 parliamentary vote. After the meeting, Tadic declined to say whether he wants to serve as premier, saying “personnel questions were not on today’s agenda but they will be very soon.” Nikolic wants to call talks with party leaders to form the nation’s next government after he is sworn in as the head of state on June 1.

Serbia, a former Yugoslav republic that’s struggling to head off a return to a recession, has been without a government able to cut spending and create new jobs in an economy with an unemployment rate running about 24 percent. Tadic would need to cobble together a majority of support in parliament to get his party back in power after he lost his bid for re-election.

“Tadic must make up his mind as soon as possible and decide what he wants to do with his life,” Nikolic told reporters on May 24, after stepping down as the leader of his Progressive Party.

‘Don’t Know’

“I don’t know who will form the government, it seems it will be the Democrats, Socialists and parties of the former coalition, but I ask them to make quick decisions,” Nikolic told state broadcaster RTS in a pre-taped interview posted on the its website.

Nikolic took 49.54 percent of the vote in presidential elections, compared with 47.31 percent for Tadic, whose popularity was eroded by nationalist concerns the country would cede its claim over the breakaway province of Kosovo to win EU membership and austerity programs that are sweeping Europe.

The Progressive Party’s victory gave it 73 seats in the 250-seat legislature and control of about 94 lawmakers in a pact with the anti-EU party of former Premier Vojislav Kostunica. Tadic’s Democrats came in second place with control of 111 seats in an alliance with the third-place Socialist Party. A coalition needs 126 seats to gain power.

Nikolic told journalists on May 24 that he won’t insist on who will form the new Cabinet and prefers a “quick act” to form the government because Serbia’s public finances are in a “horrible” state.

‘Catastrophic’ Finances

His deputy, Aleksandar Vucic, said today the “financial situation is catastrophic” and the government will have to repay 136 million euros ($170 million) in interest in September, 72 million euros in October and 69 million euros in November.

Whoever leads Serbia’s new government will need to mix a leaner budget with more public investment to jump-start the economy, which contracted 1.3 percent in the first three months, and keep a lid on unemployment.

The National Bank of Serbia has already urged politicians to quickly form a government and take steps toward fiscal consolidation to persuade the International Monetary Fund it’s committed to maintaining macroeconomic stability and allowing for the continuation of a $1.3 billion precautionary loan after talks were suspended in February because of a widening deficit.

Without a government, the dinar has dipped to a new low of 116.4480 to the euro. The central bank has spent 1 billion euros from official foreign-exchange reserves this year so far to curb the weakening of the dinar, the sixth-worst performer among 174 currencies tracked by Bloomberg.

“Psychological instability has appeared among many people, including foreign investors, who do not know the makeup of a new government and its program,” Nikolic told state broadcaster RTS interview posted on the its website. He said Serbia if facing “tough financial problems” and will be “unable to resolve them without international assistance.”

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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