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The Government of the Republic of Serbia

In the service of citizens

Parivodic welcomes interest rate reduction on housing loans

Belgrade, 13 September 2005

The Serbian Minister of International Economic Relations Milan Parivodic welcomed today the strategic decision by HVB Bank to reduce interest rates on housing loans and pointed out that he is committed to open competition in all economic sectors.

Milan Parivodic

Parivodic said in a written statement that only an open market and equal competition can offer better quality goods and lower priced services to its citizens. This, in turn, he said, directly improves the quality of life of all Serbia-Montenegrin citizens and satisfies the Serbian government’s main aim.

He assessed that HVB Bank has shown leadership and a business ambition by announcing the new interest rates of 4.75 percent for housing mortgage loans, and added that this piece of news is of great significance for all citizens in Serbia-Montenegro, since it makes it possible to reduce living expenses from now on.

The Minister said that the reduction of interest rates by half asserts his earlier statements that a bank cartel existed on the market and that the profits achieved by individual credits were extremely high in comparison with those in surrounding countries.

Parivodic pointed out that the interest rate reduction on housing loans confirms that only a large number of competitors and open competition among them will lower living expenses in Serbia. He also said that prices in Serbia are about 20 percent above the actual prices, in other words, above the prices that would exist if the Serbian market was competitive.

However, Parivodic pointed out that the reduction of interest rates has not yet made the solving of living problems for Serbia’s citizens less expensive, and he assessed that reforms of construction rights’ and land ownership relations must make it easier and must shorten the construction process, by which the price of a square metre will fall, especially in Belgrade where the prices are incredibly high.

Parivodic said that a square metre of a new flat, in the centre of Sofia, costs range from €800 to €1,000, while in Belgrade costs are from €1,800 to € 2,200, which is more than in Vienna, proving that there are serious inefficiencies in the field of civil engineering that must be eliminated. Parivodic also announced that the Serbian government will begin to address this matter with added intensity.