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The Government of the Republic of Serbia

In the service of citizens

Serbia expects $2 billion of FDI in 2005

Belgrade, 21 May 2005

Serbian Minister of Finance Mladjan Dinkic said today that the Serbia-Montenegrin Investment Forum is expected to gather some 400 investors and that they will be acquainted with progress in reforms in Serbia. He also stressed that this year Serbia will attract a record $2 billion of foreign direct investment (FDI).

Mladjan Dinkic addresses the media

Dinkic said that the banking sector alone should attract between $750 million and $1 billion of FDI and he added that the privatisation of state oil company NIS and other companies will be mentioned at the Investment Forum.

Dinkic stressed that foreign investors recognise the importance of the positive Feasibility Study for the inflow of investment in Serbia and he added that Serbia’s upgraded credit rating by the Fitch International Ratings Agency will improve the terms for crediting foreign investors by their native credit agencies.

Belgrade will show that it is capable of hosting such international meetings, said Dinkic and he added that Serbia will also show its new face, the face of a country aspiring to become a regional leader in economic growth rather than just a country associated with wars and war crimes.

He announced that after this meeting, Serbia will launch an aggressive campaign to promote and advertise its economy across Europe.

Dinkic said that he and Prime Minister Vojislav Kostunica have already received an official invitation from Austria to visit Vienna this fall and to present business opportunities for Austrian investors in Serbia. He added that similar presentations will also be held in Germany, France, the UK, and other countries.

He recalled that a €60 million loan for the modernisation of Serbia’s railways infrastructure is among the most important agreements with the European Investment Bank (EIB), adding that the European Bank for Reconstruction and Development (EBRD) will set aside a further €60 million for the same purpose.

According to him, the €120 million deal for the modernisation of Serbia’s railways can be expected by the end of the year. The funds will primarily be used to procure new locomotives and railcars but also for the reconstruction of railroads, primarily on international Corridor 10.

Dinkic added that a project for the construction of ten new schools in Serbia is under way, worth €25 million and funded by the EIB.

He announced that a project for the modernisation of air traffic control, worth €36 million, will be signed in June given that a reconstruction of the Belgrade Airport should be completed by the end of the year.

Dinkic expressed the hope that the Belgrade Airport will see much more traffic in the future than in the past few years given the growing interest in Serbia among foreign tourists and investors.

According to him, there is another important project that Serbia will agree with the EIB by the end of the year, that being a modernisation of clinical centers across the country. In the initial stage, some €80 million will go towards upgrading the clinical centers in Belgrade, Novi Sad, Kragujevac, and Nis, while a further €70 million are expected to be approved over the next few years.

Serbia expects $2 billion of FDI in 2005

Dinkic said that the money will be spent on the reconstruction of facilities as well as for the procurement of state-of-the-art equipment in order to bring the quality of Serbian hospitals up to the European standards.

He added that a further €25 million will go towards modernising the infrastructure in underdeveloped municipalities and explained that the state will provide guarantees and that the EIB will approve a loan for this purpose.

During the day Dinkic met with representatives of the HVB Bank. Before the beginning of the Investment Forum he met with Ukrainian Minister of Finance Victor Pinzenyk, the Japan’s finance minister and representatives of the Nordic Investment Bank (NIB).

The talks focused on ways of improving bilateral cooperation, Dinkic explained and added that Serbia is interested in stepping up its cooperation with Japan, primarily in the field of electronics and auto parts.

Dinkic recalled that Serbia’s exports to the Ukraine are dominated by products of Backa Palanka’s carpet maker Sintelon and Vrsac’s drug maker Hemofarm but he stressed that the cooperation can be further improved.

He announced that a framework agreement will be signed with the NIB to assist the areas affected by the flood and he explained that the NIB operates in a similar way as the EIB except that it gathers Nordic countries only and that it gives more favourable terms for its loans.