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The Government of the Republic of Serbia

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IMF approves 5th revision of three-year arrangement with Serbia-Montenegro

Belgrade, 30 June 2005

Serbian Minister of Finance Mladjan Dinkic said that a decision of the International Monetary Fund's Board of Directors to approve the fifth revision of the three-year arrangement with Serbia-Montenegro represents a positive assessment of the Serbian government's economic policy.

Mladjan Dinkic

Dinkic told a press conference that the fifth revision means that Serbia will receive a $183 million loan for strengthening foreign currency reserves of the National Bank of Serbia. He recalled that the realisation of the three-year arrangement, whose total value stands at $950 million, began in May 2002 and that it includes six revisions. He voiced hope that the arrangement will be completed in November.

The Minister said that the Paris Club of Creditors decided to allow Serbia to postpone the payment of interest rates on its debts to this club, in which action Serbia saved more than 600 million dinars.

According to Dinkic, Serbian Deputy Prime Minister Miroljub Labus during his visit to Brussels, reached an agreement on a new tranche of the EU's macro financial assistance to Serbia-Montenegro, worth €70 million. Of the total sum, Serbia will get €63 million. Dinkic voiced hope that the agreement on the new tranche will be signed in autumn.

The Minister recalled that the IMF rated favourably Serbia's fiscal and monetary policy, as well as the restructuring of public companies and privatisation of socially-owned firms, with the recommendation that that process be accelerated.

Dinkic said that all these events are an encouragement for the Serbian government before the upcoming negotiations on a Stabilisation and Association Agreement with the EU.

Dinkic stressed that the fact that US President George Bush signed a proclamation designating Serbia-Montenegro as a beneficiary developing country under the Generalised System of Preferences is of great importance for Serbia's bilateral relations with the US.

Dinkic explained that Serbia's food and rubber industries will especially benefit from this, and added that this decision also has significant political importance since it was the last obstacle in the diplomatic relations of the two countries.

The Minister said that these decisions of the US President and the Paris Club of Creditors will influence the improvement of the general working atmosphere and the reduction of the investment risk in Serbia.

He announced that the Serbian government will at today’s session bring a decision on the establishing of the Youth Fund, at the proposal of the Ministry of Finance. For that purpose, 500 million dinars will be set by the budget revision. The fund's aim will be to stimulate young talents.

That money will be used for awarding monthly scholarships to the top 1000 university students of state universities, worth 20,000 dinars per each student, the Minister specified and added that the best 100 students will receive €15,000 for enrolment or tuition for postgraduate studies abroad, on the condition that they work in Serbia for at least five years after the studies.

According to him, 100 students will receive up to €5000 for financing professional training in EU countries. Funds for financial awards are also envisaged for high school students and students who achieve success in the Balkan student sports competition-Balkanijada and at district, regional, republic, world and European competitions. The first place award on a world or European competition will be 1 million dinars. Dinkic said that this decision will be applied from July 1 and stated that the Council of this Fund will announce a competition for the best students already in July, while the first scholarships will be approved in September.