The keyword of liberal thought is distrust. In government, of course. Here is how it looks like when applied to what the Serbian Minister of Finance and The Governor of the central bank are saying.

First of all, the cash register is empty. It is not a central question of whether that is correct or not. Essentially, the state’s cashbox should not even be full. If the budget is well balanced that means that the current revenue is equal to the current expenditure. Surplus or deficit can turn up when the revenue and expenditure are not balanced, which naturally cannot be avoided. The government temporarily saves money or borrows it, depending on the circumstances. Why then the story of the cashbox being empty?

It is funny that it is coming from the minister of finance who has been spreading optimism since his first day on the job, when the budged and the medium term budget projection were being drafted, and he boasted about a budget surplus just yesterday. Nothing that the Ministry of Finance says now sounds reassuring. Especially since no data can be found anywhere. How about showing us the account?

Secondly, the state will have to borrow money, if something is not sold. Up to now it was spending the money from privatization, now there will not be any for pensions and other current liabilities. Why was the money from privatization being spent on current expenditure? The poor International Monetary Fund has been trying to persuade every finance minister in Serbia for the past eight years that privatization revenue should not be counted on as a given when you are planning current expenditure. Why? Because it is not current revenue. What was to be done? Show deficit and borrow money to cover it.

A digression. Now we see, actually we are told, and we already knew it or we could have known it if we wanted to, that all Serbian governments from 2000 to the present day have done the same as Milosevic’s governments. Remember Telekom and 1997. At least in that respect there are really no obstacles for the coalition of the Democratic Party and the Socialist Party. They are not only sharing the pain, but also their relations to public finances. And this other thing represents, remember Machiavelli, a much firmer and more immediate connection.

The real question is not whether the government should borrow money, but rather why it has not been doing so up until now? It hasn’t, not because all those ministers of finance did not know that, but because it was necessary to boast about the success in fiscal policy, and the main proof was in the budget, along with the regular servicing of obligations to the budget users. Because of that the question is raised – what is the purpose of this story about the deficit in the public cashbox?

Pressure. The public should be pressured into asking for the sale of something, so that there could be salaries, pensions and investments from the National Investment Fund (that is some story, with elements of humiliating the public, but it is another subject completely). What could be sold quickly? The Petroleum Industry of Serbia ( NIS) and JAT. The ministers themselves say that. This is, naturally showing gratitude to Vojvodinian voters. It is good to know that the “voters” in The Kremlin are more important to the Democratic Party than those in Vojvodina. The public should be sold that business deal, which is by far the most scandalous to date, and the competition is not weak, so that is where the fear mongering that there will be no money for pensions comes from.

So if you do not want us to go into debt and you want your salaries, pensions and roads, show your support for the scandalous agreements to sell NIS and JAT for next to nothing.

Thirdly. The National Bank is powerless. Let’s go back in time one year. The National Bank was the only institution that was responsible for and that took credit for low inflation. Now only the National Bank is not responsible for the accelerating of inflation. In the past year there were people who had to take all kinds of criticism, not to speak of intrigues, because they warned about the problems in the central bank’s monetary policy. And nowadays a man is undertaking the same risk if he asks why the central bank is not responsible if the inflation is out of control or, if that sounds too alarming, why it will not realize the goal set by itself, although that goal is so widely set that it should not be too hard to realize.

If the central bank is responsible for inflation, it is safe to presume that it can control it. What would that include? Since the central bank can influence only the amount of money, it means that for lower inflation rate it is necessary to have a lot less money in circulation. Can it do that? If it cannot, it should close shop called the central bank and open one called fiscal accounting (just like in Milosevic’s time, the comparison is again inevitable). If it can do it that means that it has been carrying out a policy that enabled the current inflation. And that is directly opposed to the primary purpose of monetary policy and its responsibilities for its fulfillment. The National Bank does not have a responsibility of attending to the destiny of one coalition or another, one finance minister or another, one government or another. Naturally, if it is not it’s responsibility to do so. That is to say, if we are talking about an independent institution.

Is it? The results say it is not. Why is it possible to assure the public that the central bank gets all the credit for slowing the inflation down, but none for its acceleration, that is the key question? As long as the public does not raise that question the central bank will not be independent, that is to say it will not be held responsible to that same public, to which it promised, please recall, a low inflation rate. It will be accountable to the finance minister, the Vice President of the Government and their political interests.

For those who cannot stand liberals and neoliberals, this is an example of the purpose of one of the key liberal values – the distrust in government and those in power. Not only is this incorporated into liberal constitutions but it also has an analytic value. The reasons for that distrust lies not only in the need to dispute what those in power say but in the need to understand why the government, to put it mildly, distorts the facts, if it is not hiding them altogether.

Translated by Ivica Pavlovic

Pešč, 09.06.2008.

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Vladimir Gligorov (Beograd, 24. septembar 1945 – Beč, 27. oktobar 2022), ekonomista i politikolog. Magistrirao je 1973. u Beogradu, doktorirao 1977. na Kolumbiji u Njujorku. Radio je na Fakultetu političkih nauka i u Institutu ekonomskih nauka u Beogradu, a od 1994. u Bečkom institutu za međunarodne ekonomske studije (wiiw). Ekspert za pitanja tranzicije balkanskih ekonomija. Jedan od 13 osnivača Demokratske stranke 1989. Autor ekonomskog programa Liberalno-demokratske partije (LDP). Njegov otac je bio prvi predsednik Republike Makedonije, Kiro Gligorov. Bio je stalni saradnik Oksford analitike, pisao za Vol strit žurnal i imao redovne kolumne u više medija u jugoistočnoj Evropi. U poslednje dve decenije Vladimir Gligorov je na Peščaniku objavio 1.086 postova, od čega dve knjige ( Talog za koju je dobio nagradu „Desimir Tošić“ za najbolju publicističku knjigu 2010. i Zašto se zemlje raspadaju) i preko 600 tekstova pisanih za nas. Blizu 50 puta je učestvovao u našim radio i video emisijama. Bibliografija