At the sitting held on 12 February, the Finance Committee considered the National Bank of Serbia 2007 Annual Account with Authorised Auditor’s Report, National Bank of Serbia 2007 Report and National Bank of Serbia 2007 Report on the State of the Insurance Market.

The sitting was attended by the Governor of the National Bank of Serbia, Radovan Jelasic who outlined the report of the National Bank for the Committee members.

At the beginning of the sitting, the Committee Chairman noted that there is no representative present at the sitting to elaborate the Deposit Insurance Agency’s 2007 Activity Report, and that by the beginning of the sitting the Committee had not receives any nominations for National Bank of Serbia Council President, so the Committee members decided to discuss these items at the next sitting.

Outlining the National Bank of Serbia 2007 Annual Account with Authorised Auditor’s Report, the National Bank Governor stated that the auditor’s opinion of the NBS’s annual account is positive. He added that NBS’s losses in 2007 amounted to 8.2 billion dinars, the reason for which lies in the negative exchange rate differences of 14 billion dinars, as well as the weakening of the dollar in 2007. The foreign currency reserves increased the same year and additional income was realised from the placements. In order to decrease the inflationary pressure and achieve price stability, NBS was forced to sterilise the excess inflow from abroad, so sterilisation expenses rose by 55%. NBS’s losses were covered by 10 billion dinars worth of reserves transferred from the 2006 balance into 2007.

The Governor also presented the National Bank of Serbia 2007 Report to the Committee members, stressing that the NBS reached its goal - to keep basic inflation between 4% and 8%, because the inflation realised in 2007 amounted to 5.4%. At the beginning of the year the repo interest rate was 14%, only to decrease to 9%, and at the end of the year, due to crisis, it rose again. Volume of trade at the international banking market increased fourfold and amounted to 22.3 billion euros. The 2007 exchange rate was not calculated based on fixing, but based on interbank trade. The debt to IMF was paid off, volume of loans increased by 37%, total bank capital rose by 112 billion dinars and at the end of 2007 bank capital base amounted to 328 billion dinars.

The National Bank of Serbia 2007 Report on the State of the Insurance Market states that the sum of insurance has risen by 26%, the capital increased by 19%, the technical reserves from which the insurance premiums are paid increased by 37% and that the total premium was at a 45 billion dinar level i.e. 17% growth was realised. Life insurance rose from 10.6% to 11%, and the share of non-life insurance amounted to about 89%. The number of insurance companies rose from 17 to 20, and the number of employees grew by 17%. The insurance sector records a faster growth rate in 2007 in the gross domestic product than any other.

Discussing the items on the agenda, the deputies and Governor of the National Bank of Serbia talked, among others, about the manner of selecting an auditing house to control the NBS account, foreign currency reserves, insurance companies’ reports and reference interest rate.

The sitting was chaired by the Committee Chairman, Zoran Krasic.