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The Government of the Republic of Serbia

In the service of citizens

Agreements with IMF, World Bank send positive signals to foreign investors

Belgrade, 28 April 2004

Serbian Deputy Prime Minister Miroljub Labus and Minister of Finance Mladjan Dinkic told a press conference today that the agreement which a Serbian government delegation reached with representatives of the International Monetary Fund (IMF) during a recent visit to Washington will mark the end of the three-year extended arrangement with the IMF. The arrangement will give Serbia another 15 percent write-off ($660 million) of its debt to the Paris Club in mid-2005.

From left: Miroljub Labus and Mladjan Dinkic

Author: Fonet

The agreement with the IMF will send a positive signal to prospective investors that Serbia’s economy is back on the reform path after a standstill in 2003, said Labus.

The agreement will allow Serbia to draw $140 million in two tranches under the extended arrangement with the IMF, the Deputy Prime Minister said, adding that the country will also receive a $120 million loan from the World Bank and a further €95 million in assistance from the European Union this year.

According to Labus, Serbia’s industrial production in the first three months of the year exceeded the projected figures, approaching a 11.7 percent year-on-year increase. Industrial output in March 2004 rose 17.6 percent against the same month of 2003, he went on to say, adding that overall economic growth this year is likely to outstrip initial forecasts.

The new loans will not make Serbia overindebted, Dinkic insisted and noted that the country will cover its budget gap. Serbia, which has agreed on a 30 billion dinar budget deficit with the IMF, will cover the gap by raising revenues and cutting spending. The announced World Bank loan and the EU assistance will also be used to close the gap, the Minister said, adding that the country will cash in at least €200 million in sell-off receipts this year.

According to Dinkic, Serbia’s public debt will be below 60 percent of GDP at end-2005, compared with 150 percent of GDP in 2001 and 73 percent in 2003.

On May 4, Ball Packaging will start the construction of a €80 million can plant in Zemun, the Minister said. Also in May, a world’s top car maker will buy a local company currently restructuring, he added.

According to Dinkic, Serbia’s annual inflation rate this year will not exceed 8.5 percent, down from the initially projected 9.5 percent.