Serbia appointed a lawmaker from the country’s ruling coalition as governor of its central bank on Monday, deepening concern over the bank’s independence and the new government’s commitment to reforms sought by the European Union.
Parliament endorsed Jorgovanka Tabakovic, a senior member of the co-ruling Serbian Progressive Party, to replace Dejan Soskic, who resigned last week over a law stepping up government control over the bank.
The law, adopted on Saturday, creates a powerful, parliament-appointed supervisory body to be represented on the bank’s executive board and gives the assembly responsibility for appointing its entire top management.
The Socialist-led government, which took power last month, wants to harness the bank’s support for more expansive fiscal policies to spur the moribund economy and curb unemployment of 25 percent.
It appeared to ignore a warning from the EU that the ex-Yugoslav republic risked taking a “step back” on its path to membership if it tried to undermine the bank’s autonomy.
The International Monetary Fund has cautioned the law would have consequences for a frozen 1 billion euro (787.04 million pounds) standby loan deal that the new government says it wants to renegotiate.
The move is reminiscent of neighbouring Hungary’s recent clash with the EU over the independence of its central bank. The EU made Serbia an official candidate for membership in March under the previous Democrat-led government, but has yet to set a date for accession talks.