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The Government of the Republic of Serbia

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Successful Washington talks to speed up stabilisation and association agreement with EU

Belgrade/Washington, 19 April 2005

Serbian Minister of Finance Mladjan Dinkic said last night that the Serbian government’s delegation had successfully completed talks with the International Monetary Fund (IMF) and reached an agreement on the fifth review of the ongoing three-year arrangement.

Mladjan Dinkic

Dinkic told reporters at the Serbia-Montenegrin Embassy in Washington that he expects that the IMF board will approve a further $200 million loan to Serbia this June.

He said that IMF Acting Managing Director Anne Krueger had confirmed that the programme was going to plan but that the country must step up structural changes, keep public spending on the existing level, and reduce the current account deficit.

The Serbian delegation requested an extension of the three-year arrangement with the IMF, said Dinkic and voiced hope that an extension will be approved by May 15.

He explained that if such a deal is approved, the IMF arrangement would be completed by the end of the year and that it would be followed by a $700 million write-off from the country’s debt to the Paris Club of sovereign creditors.

Dinkic also said that the agreement with the IMF will allow for further cooperation with the World Bank and speed up the signing of a stabilisation and association agreement with the European Union.

He added that the delegation and the World Bank had agreed on the realisation of investment projects worth a total of $190 million as well as a developmental loan worth $55 million, intended for Serbia’s budget. The loan should be approved by the World Bank’s board in October, according to Dinkic.

The delegation’s talks with representatives of the US administration were also very good, said Dinkic and added that an improvement in relations between Belgrade and Washington is noticeable. According to him, the Serbian government’s credibility with the US administration has significantly improved since the beginning of the government’s term.

Dinkic added that this was especially evident during talks with US National Security Advisor Stephen Hadley, who openly said that the US will support Serbia on its path towards the EU and offer aid in resolving other problems.

Serbian Minister of Economy Predrag Bubalo assessed that negotiations with the IMF were exceptionally difficult, but that when an agreement is finally reached, it will be a strong signal to foreign investors.

According to him, this was also confirmed in talks with representatives of several companies that have already made progress in negotiations on privatisation of certain companies in Serbia. Bubalo expressed the expectation that these talks will conclude on a positive note, and underlined that they will be another indicator of the readiness of US companies to invest in Serbia.