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The Government of the Republic of Serbia

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Serbia praised for lawful use of international donations

Belgrade, 7 May 2004

The Serbian Ministry of International Economic Relations has been commended for the regularity and legality of using international donations, with Serbia pointed out as a good example in the region, said Minister Predrag Bubalo at a press conference today presenting the Report on the International Assistance to the Republic of Serbia 2003.

Serbia praised for lawful use of international donations

Bubalo told reporters that a total of €629.07 million was used in 2003, or 3.3 percent of the GDP, of which €359 million, or 57 percent, was in grant-aid. The remaining €269, or 43 percent were in loans.

Minister said a total of €627 million in aid is expected this year, of which €164 million, or 24 percent, will be in grants, while the remaining €522 million, or 76 percent, will be in loans.

Bubalo said that the share of grant-aid in the total financial assistance to reforms is declining at too high a rate. He added that the sudden change of the structure of international aid is worrying given that the process of restructuring and privatisation is not finished yet and that it could result in more unemployment and cause additional economic and social problems.

Even though the loans are favorable, under the so-called IDA terms and with a 20-year repayment period and interest-free, the ministry thinks that the situation calls for greater share of grant-aid, said Bubalo and added that this was stressed during the recent meetings with representatives of the international community.

He said that certain developments, such as the March violence in Kosovo, have made some investors to put their aid on ice, which could slow structural reforms of our economy and industry.

Since the issue of international assistance to Serbia is of great importance, the government has set up a special commission to draw up a strategy as regards donations, headed by the Prime Minister, and which also comprises the Deputy Prime Minister and Minister of International Economic Relations, Bubalo said.