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The Government of the Republic of Serbia

In the service of citizens

Memorandum on loans to Kragujevac, Bor and Vranje signed

Belgrade, 27 June 2005

Representatives of the Serbian government and Kragujevac, Bor and Vranje local self-governments signed today a Memorandum on cooperation which represents the basis for the implementation of a Serbian government programme for stimulating growth and employment through an 800 million dinar loan. The town of Kragujevac will receive 400 million dinars, while the Bor and Vranje municipalities will be given 200 million dinars each.

Minister of Finance Mladjan Dinkic, Minister of Economy Predrag Bubalo and Minister of Labour, Employment and Social Policy Slobodan Lalovic signed the Memorandum on behalf of the Serbian government.

Minister Dinkic said that the government’s decision to approve these favourable, short-term loans to the Kragujevac, Bor and Vranje municipalities was motivated by the fact that socially-owned companies from these areas have in the past received the most subsidies.

According to him, 6.5 billion dinars had been set aside from the Serbian budget for subsidies in 2004, this year the figure will be 5 billion, while subsidies will not be given in 2006.

Instead of subsidies, the government intends to increase investments, with the support of local-self governments who are required to provide free building sites, utility connections and building permits, Dinkic explained.

He stressed that the Serbian government’s programme for reviving the economy and increasing employment in the Kragujevac, Bor and Vranje municipalities will enable new investments in all areas, above all trade and agriculture.

Dinkic said that projects which stimulate employment and higher exports will be given preference, and added that all those employing over a hundred persons will be given a limitless loan, while restrictions will be set depending on the number of employees.

The Minister of Finance specified that one of the conditions for receiving a loan will be that at least 70 percent of the workers must be previously unemployed and residing in the territory of those municipalities.

These are long term loans for investment and working capital with a five year repayment deadline, a 0.5 percent annual interest rate and very liberal protection instruments, the funds will be realised through the Serbian Development Fund, Dinkic underlined.