Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic said today at the Kopaonik Business Forum 2010 that Serbia should use the models of economic growth based on exports and attracting foreign investors.

Dinkic said that Serbia needs investments such as Fiat’s in Kragujevac because of the effects of such long-term investment, he said.

He warned that the share of exports in Serbia’s GDP is 19%, while in the EU it amounts to 50%.

The Minister said that the situation in Belgrade is not as dramatic as in other parts of Serbia, and stressed that high unemployment and low purchasing power are the current challenges that the government is facing.

He reiterated that the unfreezing of wages in September this year is necessary.

He announced that a formula for calculation of salaries needs to be discussed with representatives of the IMF.

Dinkic explained that the government's proposal is to adjust salaries according to the rate of inflation, plus half of the growth in GDP.

He also announced the increase of the lowest pensions.

This should cost more than RSD 10 billion or 0.3% of GDP, while all these measures will increase employment and demand, production and exports.

He announced that the competent ministries in cooperation with the National Bank of Serbia (NBS) will prepare a model of subsidised cash loans of up to €3,000 in the dinar counter value intended for the middle class, with a repayment period of three years and a one year grace period.

Dinkic also said that loans for public infrastructure are needed, recalling that around €1.2 billion has already been secured from international financial institutions for this purpose.

The Deputy Prime Minister concluded that the key issue in 2009 was to stop the decline, and in 2010 to speed up recovery.