Serbian Minister Mlađen Dinkić Named Finance Minister of the Year

The British monthly Euromoney has named Serbian Finance Minister Mlađen Dinkić Finance Minister of the Year 2006, announcing its decision during the annual meeting of the World Bank and IMF in Washington.

Dinkić was the first governor of the National Bank after the change of government in Serbia in 2000, and according to this publication, which is a reference media for the financial world, he is credited with the economic recovery of Serbia, specifically for putting the financial system of Serbia, devastated during the Milošević era, back on its feet. Leading the state finances of Serbia, he achieved a reduction in the budget deficit from -4% GDP in 2003 to a surplus of 1.5% GDP in 2005 and 2006, while simultaneously reducing public debt from 50% to 34%, making Serbia one of the least indebted countries in Europe.

He is credited with drastically reducing inflation from 113% in 2000 to 12% just two years later, and a tenfold increase in foreign exchange reserves. However, his most spectacular move was the reform of Serbia’s banking sector and the restoration of citizens’ trust in banks, when he closed bad banks, including the four largest banks in the country that held 70% of banking assets. Unlike Croatia and Slovenia, Euromoney notes, where banks were consolidated at a huge cost to taxpayers, Serbian banks were simply abolished.

Dinkić revoked the licenses of 25 banks and established the National Savings Bank, a state bank that compensated account holders from four banks and then took over their roles. A far-sighted move was also the early repayment of debts to the IMF and World Bank in 2006, ‘to show that we treat foreign creditors the same way as domestic ones,’ but with the message that Serbia no longer needs such financial assistance. Most importantly, his ministry established a stable tax system, which contributed to Serbia attracting a record 4.5 billion euros in direct foreign investments last year, three times the amount in 2005, despite the chronically unstable political environment in the country. (Davorka Zmijarević)