“ here i am, a smart lad, successful, good looking …. look at me … it is the exchange rate …. it is unrealistic, interest rates are sky high, they have put up all these administrative barriers and ….. what happens …. it is my product that flops in the market. ” of course, it is much easier to build castles in the air and to think that we would have been successful if only somebody else, most likely the state, were to provide the “ right ” conditions for us, than to face all the harshness of reality! • what matters in a market determined environment is not only to offer high quality goods and services. you also need to have a good banker, to be aware of all the risks and to hedge against them. to keep making progress in your profession, you also need to be kind of a visionary! reality is often harsh and life seems much easier and prettier when engulfed in the haze of inflation and instability to which, to tell the truth, majority of us had to get used during the last several decades. such environment was created by the state, and exclusively so, and i am amazed to see that citizens and businessmen are still appealing to that very state expecting it to resolve their problems, and not only the general operating conditions, but to provide them with incentives, subsidies, price regressing, new loans, etc. as well. bearing in mind that the country is undergoing transition, we should be satisfied with the current rate of inflation in serbia. i wish to point out that the nbs has won its first “ battle ” against inflation, and that it shall win all the rest of them. however, the “ war ” has only begun, and both sides are, to speak figuratively, currently mobilizing their forces. the key question is which side shall the budget take in this battle – not in declarative terms, but in terms of numbers! defences put up by the nbs to maintain stability in prices managed to hold against a wave of consumption growth in late last and early this year pending parliamentary elections. let me remind you of the fact that when we were setting inflation targets we could not have predicted new elections, which always imply increase in expenditures. now, when the elections are over, both serbia and the nbs deserve to have a reformoriented and restrictive budget and a chance to take a deep breath in terms of monetary policy, to think of what next to do

sector is developing so swiftly that the question arises as to the competitiveness of the above credit lines from the point of view of their terms and conditions, though such terms have been improved several times. we shall continue our efforts to improve terms of these credit lines in agreement with the government of the republic of serbia and the donors but, on the longer run, our banks should also be finding greater interest in extending credits to small and medium sized enterprises. they shall certainly be forced to do so by the competition and long - term business interest. if small and medium - sized enterprises are important to the state, then they should be given its support, and not by political declarations, but by taking concrete steps. is the general economic environment in serbia today conducive to development of small and medium - sized enterprises? to illustrate, is the restructuring and privatization of large public enterprises going at the right speed to enable setting up and development of small and medium - sized enterprises around those privatized and their integration into successful broader business programs? we can hardly give an affirmative reply to this question. it shall take time. special credit lines and funds do represent a welcome initial trigger for the development of small and medium - sized enterprises, but they can neither be a permanent nor a systemic solution. it is not the role of the state to pick and choose from various funds and grant funds selectively to help resolve problems of certain categories of employees who were made redundant. the role of the state is to create a macroeconomic environment that shall be conducive to the development of small and medium - sized enterprises as an economic, not a social category. the real alternative for the future with respect to provision of credits to small and medium - sized enterprises namely, new business and new jobs, is to include banks on a broad scale in the process of market evaluation of projects and their financing at market determined terms. for its part, the nbs shall continue to create necessary conditions, primarily by securing stability in prices and low inflation, liberalization of the foreign exchange market and by further strengthening confidence in the dinar. the nbs shall secure conditions to enable everybody to plan their financial needs and business steps on a medium and long run without fear of drowning in the inflationary mud.