Serbia Politics May 2016


Aleksandar Vucic secures new four-year term as PM, thus implying no changes in policymaking

The right-wing Serbian Progressive Party (SNS) led by incumbent Prime Minister Aleksandar Vucic won the 24 April snap elections, thus indicating that there will not be any major changes in the direction of economic policymaking for the next four years.

The SNS secured 131 seats in the next Parliament with 48.3% of the votes, which was down compared to the number of seats secured in 2014. Moreover, the current government’s junior coalition party—the Serbian Socialist Party (SPS) incurred losses and secured only 11% of the vote (29 seats), which was down from the 33 seats garnered in 2014. Shortly after the elections, the four main opposition coalitions claimed that there had been irregularities in several stations, thus triggering a recount in 98 of them and a re-vote in 15. However, this did not change the results; the SNS was still the unquestionable winner. The nationalistic Radical Party (SRS) came in the third place with 8.1% of the vote (22 seats), underlining the increasing appeal of Eurosceptic parties. Moreover, several other small parties managed to surpass the required 5.0% threshold and thus gained representation in Parliament at the expense of the bigger parties.

In April, Vucic called for snap general elections two years before the end of the government’s mandate in order to consolidate SNS’ position and to ensure an extension of his mandate before embarking on a new round of austerity measures as requested by the IMF under the Stand-By Arrangement (SBA). While the election results show that the SNS could govern alone since it has more than half of the total seats in Parliament, Vucic has emphasized that he will reach out to other parties in order to build a broad coalition that will allow the government to push forward with the reform agenda and steer Serbia toward EU accession. Last year, the country managed to bring down the fiscal deficit to 3.8% of GDP—the lowest level in seven years—mainly by cutting public spending. Jose Cerveira, Economist at JPMorgan, comments on the government’s reform drive:

“We expect the reform process will gain new momentum after the elections, likely starting with the agreed reduction in headcount. SOE reform will also likely receive new impetus initially, but we think it’s a more complex issue, with higher social sensitivities and stronger political interests likely to lead to new periods of standstill down the line. Nonetheless, we expect some progress will gradually be made, as the country will remain dependent on foreign financing and IMF approval for reform credibility.”

Going forward, the government is expected to take advantage of the good momentum and build on the strong political position in order to move forward with necessary reforms. In fact, Vucic has already announced plans to privatize several loss-making state firms as well as speed up private investment in an effort to stimulate economic activity.

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