Serbia mulls ‘big’ privatizations

BELGRADE – Serbia should consider floating shares of big state-owned companies on local and international stock markets to secure more foreign investment and faster growth, Economy Minister Mladjan Dinkic said yesterday. Dinkic said his ministry was preparing the IPO proposal for the privatization of big state monopolies and expected the government to debate it later this week. «Floating shares of big public companies will provide us with between $6 billion and $8 billion of foreign direct investment (FDI) every year in the period between 2008 and 2010, as well as annual growth between 7 and 9 percent,» Dinkic told reporters. Serbia’s economy, hard hit by sanctions and economic isolation in the 1990s, has been posting healthy growth since 2000 when the autocrat Slobodan Milosevic was ousted. In 2006, growth stood at 5.7 percent, down from 6.2 in 2005. The 2007 budget sees growth of 5.9 percent, but some government officials have said it could top 7 percent. Since 2002, when the privatization process started, more than 1,700 companies have been privatized with total revenues of -1.88 billion and pledged investment of -1.1 billion. More than 1,000 small and medium-sized companies are awaiting privatization along with big monopolies, including oil company NIS, power firm Elektroprivreda Srbije, national flag-carrier JAT and landline monopoly Telekom. «If our strategy is adopted by the government, the first company to offer shares on the Belgrade Stock Exchange in the second half of 2008 would be Telekom,» Dinkic said. «Later, the shares might be offered at a stock market abroad, most probably in London.» Dinkic said that 14 percent of Telekom’s shares should be floated, while another 15 percent should be offered to Serbian citizens for free. The state would keep the remaining majority stake. The country got a record $4 billion of FDI in 2006. Officials say that the 2007 haul is likely to be only $2.5 billion, due to a three-month political crisis early in the year, and continued investor insecurity over Serbia’s hardline stance in talks on the future of the breakaway Kosovo province. Ever since it was formed in May after lengthy negotiations, the fragile coalition government has made slow progress on privatization due to differences among its component parties on how the sell-offs should be done.