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The Government of the Republic of Serbia

In the service of citizens

Micro loans for unemployed as an active employment measure

Belgrade, 4 April 2005

Serbian Minister of Finance Mladjan Dinkic has announced that the Ministry of Finance in cooperation with the Ministry of Labour, Employment and Social Policy and the Ministry of Economy will announce a competition for those jobless to receive micro loans, amounting to between €5,000 and €20,000, with a repayment period of three to five years and a grace period of one year.

Author: Beta

Dinkic told a press conference at the National Employment Service that the micro loans are one of the government’s measures to address the problem of unemployment, one of the biggest problems Serbia is facing today. He added that the contest will most probably be announced on Wednesday, April 6, and will last 30 days. The only condition is that the candidates are unemployed and that they are registered at the National Employment Service.

He said that the amount of the loans will depend on the number of employees and added that primary agriculture production will be exempted as another credit line is planned specifically for this field.

Dinkic said that €7.5 million has been allocated from the budget for these loans, and added that if this action turns out to be a success, the government will provide additional funds for the same purpose after the budget revision. According to Dinkic, the interest rate for the approved loans will be 1 percent on the annual level, with tri-monthly repayment instalments.

The minister of finance explained that three alternative instruments for securing loans have been established: a borrower’s promissory note signed by two creditworthy guarantors, a mortgage that matches the approved loan 1:1, and surety provided by legal person for the loan applicant.

He added that the application procedure for obtaining micro loans will be carried out by the National Employment Service and the loans allocated by the Serbian Development Fund. Loan beneficiaries will have to register their enterprises within two months from the date of the loan approval and thus get off the list of the National Employment Service. Only then will the beneficiary be able to use the loan, Dinkic said and added that any kind of misuse will be punished.

Serbian Minister of Labour, Employment and Social Policy Slobodan Lalovic said that Serbia has around 500,000 unemployed, which is just a third of the total number of who are registered as unemployed persons. The remaining two-thirds of those registered are using the National Employment Service only to be able to have their social security. Therefore, social security affairs will be transferred to the jurisdiction of the Serbian Institute for Social Care by the end of the year, thus ensuring that only those who are really looking for a job remain on the list of the National Employment Service.

Lalovic said that at the next session, the government will adopt a national employment strategy from 2005 to 2010, with the aim of promoting active employment measures. He said that one of the measures will be opening a competition for receiving non-repayable funds for self-employment.

Serbian Minister of Economy Predrag Bubalo said that 1,900 new firms have been opened in the first three months of the year and said that the self-employment programme will largely help to increase the number of new firms.