Serb central bank governor may have to step down before the end of his term

BELGRADE – A parliamentary committee yesterday rejected a proposal that Serbia’s respected central bank governor should keep his job, raising the prospect that he could be forced to step down a year and a half before his term ends. The committee voted by seven to six that Radovan Jelasic should go, a surprise result as Jelasic was thought to have the support of all parties in the coalition government. The reason for the vote lies in an obscure legal provision borne out of political haggling. Serbia’s new constitutional law, passed last year, required the appointment of a new governor after a January 21 election. The provision, seen as part of bargaining over key posts, was criticized for overruling a previous law giving governors a five-year term as protection from the meddling of governments. The issue was quietly sidelined after the election as parties bargained for a coalition, finally agreed upon in mid-May. During the months of uncertainty, the central bank was praised as a pillar of stability for Serbia’s nascent financial markets. Yesterday’s vote was expected to be a routine affair, and the upset pointed to possible rifts within the new government. The news sent the dinar currency half a percent down for about an hour, though it later rebounded. «If the governor is elected for a five-year term, he should be given a chance to complete the term,» Jelasic told reporters on the sidelines of a banking forum. «If they were to discuss my work, I believe not only could I stay till the end of this term but even get the second term.» Coalition The committee’s decision is not binding, and the members could vote on the issue again this month. Jelasic could also be confirmed as governor in a vote in parliament sometime in June. Jelasic said keeping his post was a key condition set by the G17 Plus party of technocrats prior to agreeing upon a coalition. Of the other two parties in the government, the Democratic Party wants Jelasic to complete his post and then to appoint their own candidate, while the Democratic Party of Serbia says it is neutral on the subject. «There is a coalition deal on this,» Jelasic said. «They will now have to focus on how to implement it in parliament.» But if parliament fails to confirm his appointment, Jelasic would be the fifth Serbian central bank governor in the past 12 years to be kicked out before his term is over. Jelasic took up the post in February 2004. He has been praised by international institutions, such as the IMF, for his independent stance and moderating influence through a firm hand on policy and a close eye on government spending. The IMF wants Serbia to make the bank truly independent, and set clear rules for the governor’s appointment. But Belgrade plans to amend the central bank law this year and establish a five-member board that would limit the governor’s powers.

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