Economy expert: These will be the effects of tax on Serbia, Bosnia

First, he has two key points. It has said that Serbia's “trade deficit from 2005 to the end of 2017 has increased from 104m euros to 401m euros, or 2.8 times (280%)”. As second point, according to him, “CE FTA, the EU and those who support free trade can at least accuse Kosovo of attitude and dedication to free trade”.

“Problems must be requested elsewhere”, he said.

Read fully the analysis of Muhamet Mustafa:

Following the Kosovo Government's decision to impose a 100% tax on imports from Serbia and Bosnia and Herzegovina, there were also concerns over the negative effects of the move on Kosovo's budget, impacts on consumer prices, and on producers importing raw materials from these countries.

Although I have been very active in posting various aspects of the problem, there are also some invitations to elaborize these problems a little longer (notably from my friend and analyst Nedmedin Spahiu's) I am quick to address the economic dimension of the masses, even though I think the political aspect was also the same, if not more relevant behind the government's decision. Without defaming this aspect, they are focusing on economic aspects.

In a debate we had on one of our televisions the day a conversationor was taxed there and my colleague predicted severe effects on Kosovo's budget. That's why I'm working on this because we couldn't explore it there. The theme was five of us conversationors, and the time was a full hour. I don't think Kosovo's budget revenues would have to be damaged by this measure. This would happen only in the event that around 450 million imports now coming from Serbia would not be replaced by local production or imports from other countries. For imports from Serbia and BiH importers have not paid customs, but only T VSH. This will be paid even if import comes from other countries and even local products. If imported goods prices are higher than those in Serbia, because of transport, and others to catch 5 or 10 % or something more so the T will grow AV that will come into the budget and therefore revenues in the budget (for example, imports from Turkey, with which we have not yet signed the Free Trade Agreement). If we import out of CEFTA countries, the customs will be paid, and that will increase the budget. So this was a largely unreasonable heart.

What will be the potential impact on consumers, or inflammatory impact, with rising prices of production or consumption. This could be calculated roughly correctly by the AKS if we look at the effects on the consumer basket, respectively, the specific weight of goods imported from Serbia to the consumer basket, on which the ASS calculated inflation. I'm getting a simplified model for this. If we leave published statistics ( The AKS, foreign trade, 2017), see imports from Serbia amount to about 15% of total imports. If we assume that import from other countries that replace these products will be more expensive by 10%, and this is bound to be linear to price rates (and this doesn't really happen) then the overall price rate of these products could be increased by these percentages, but the effect on the consumer basket would have to be smaller, since this %s would be worth only, for these products and not for others. So only the price of 1/5 of imports would increase by 10 %. Our guess. I said these are only assumptions to illustrate the problem. A precise estimate could be made on the basis of a basket with which consumer prices are calculated in Kosovo and the specific weight that has the goods assigned to it. According to the same source of data (ASK 2017) we see that Kosovo imports from Serbia 21m euros of non-alcoholic beverages (almost all substituteable with local products); 17 million sugars, honey mela (is largely replaced by import), 14 million corn wheat (is replaced mainly by imports, at the highest price of perhaps 10-20%), depending on the situation here the Government should look at an intervenation with the price content of bread; from Serbia they are imported 14 million from wheat and flour (replaceable from local imports and products, as well as 14 million oils, and the raw food products that are also replaced by the local imports. These are the main import groupings for consumer baskets in Kosovo, and their impact on the prices of this basket that should not be the most affordable and impact on any inflammatory spiral. Hyperbolizing this influence is harmful in this situation. However, the government should neither belittle it. Accurate accounts must be drawn, and the budget must be adjusted to neutralize this impact.

Another perhaps the most serious impact of emergency treatment is the neutralisation of effects on Kosovo producers who first matter and other inputs import them from Serbia to a high percentage. Two days ago I was in the radiator factory E NRAD from Gjilan. They are supplied with steel tin from Smedereva to produce radiators and furnaces. Right now they can't afford the cost of the first 100 percent. You need time to reoritrate in alternative markets. Here the government must issue an urgent decision that the tax they pay when they import the first lesson to be recorded and therefore neutralised with its return for a while until they provide alternative supply, or until Serbia corrects its policies. The impact of this budget operation is neutral compared to the situation before the measures.

Otherwise the positive impacts of these measures, along with reducing dependence on imports from Serbia, can also be on increased domestic production and local product consumption. In the economy is known the so-called effect of the multiplayer. Every Euro spent on purchase of local products and local production inputs has a multiplaying effect 3-5 times, depending on the product structure, so that euro takes a walk in the country contributing to economic growth and new jobs. The Euros we spend on imports have a bearing on where we import. (Of course this is not only about imports from Serbia). Right now, even in theoretical discussions, a euphoria has been corrected that came in the 1990s, and the first decade of this century, as a consequence of which were neglecting the active industrial policies for industrialising economies in transition, or economies that have faced the need for post-war reconstruction and the Sanitation of a brutal dezinism such as the case with the Kosovo economy. So very nominal economists are suggesting policies that increase local bid and competitiveness (supplely police side). Kosovo cannot be accused of changing CEFTA principles and free market. It is, along with Albania, rigorous humility of those more than all other CEFTA countries, and especially more than Serbia and BiH. She's not suspending her free economy with this decision. There is only problem with two countries and 15%, 3%, respectively. (Be H) of imports. So from countries that hit its international position and sovereignty. Otherwise, if it were for the suspension of free trade and competition, my full support for the Government decision would differ greatly from what I have done as head of Riinvest or deputy. I believe that only free market, fair competition and active development and industrial policies for growth of local bid are key to Kosovo's economic prosperity and similar economies like that of Kosovo.

Otherwise, to illustrate that the trade deficit with Serbia has been necessary, however, to regulate, among other things, trade with Serbia (in spite of political aspects) is sufficient to pay attention that the trade deficit with Serbia from 2005 to the end of 2017 has increased from 104 million euros to 401 million Euro or 2.8 times, while the overall deficit in exchange for Kosovo in this period has increased about 2.4 times, by 40%. I have said in other cases that Kosovo has beenlittled during these problems and ignored the recommendations you address. A positive turn has been made over the past three years with the fiscal package 1 and 2 and also some measures that have been taken to continue them last year. CEFTA, the EU and those who support free trade can at least accuse Kosovo of commitment to free trade. Problems should be looking for you.