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The Government of the Republic of Serbia

In the service of citizens

Agreement on clearing debt between Russia, Serbia initialled

Belgrade/Moscow, 13 December 2006

Serbian Minister of Economy Predrag Bubalo and Russian Minister of Emergency and Calamity Relief Sergei Shoigu met today in Moscow to initial the agreement on the clearing debt of $288 million between Serbia and Russia.

As Co-President of the Serbian-Russian Committee for Commercial, Economic, Scientific and Technical Cooperation, Bubalo is heading a Serbian government delegation on a visit to Moscow. In a statement to the Tanjug news agency he explained that out of this sum $188 million will be used to settle Serbia's obligations for the gas it received from Russia.

The Minister also said that $100 million will be used for revitalisation of the Djerdap hydroelectric power plant and the amount Serbia is entitled to in the form of interest will be used for the construction of an accelerator at the Vinca Institute for Nuclear Research.

He also said he expects the agreement to be signed by end-2006.

Speaking about the Free Trade Agreement signed between Russia and Serbia in 2000, Bubalo said that the Serbian delegation was told that all Russian ministries, except the justice ministry, have stated their opinion on the agreement therefore it will now be forwarded to the Russian Duma.

Bubalo stressed that the Serbian delegation has been given firm guarantees that by the end of the first quarter of 2007 the Russian Duma will ratify the Free Trade Agreement after which the list of products which will be customs free will be prolonged. He also added that there have already been talks on further trade liberalisation between Serbia and Russia.

Bubalo added that the delegation was told that on December 20 a memorandum of Understanding will be signed by representatives of the Serbian government, Serbian gas company Srbijagas and Russia's Gazpromexport regarding the construction of a 400-kilometre transit gas pipeline through Serbia.

Bubalo stated that this will be the first greenfield investment worth nearly $1 billion.

The Minister of Economy said that that the Russian side received all responses to their questions and that the National Bank of Serbia (NBS) gave approval to the Bank of Moscow for acquisition of Agrobanka, which will be an impetus for Russian investors.

According to him, the meeting in Moscow also focused on participation of Rosoboroneksport in privatisation of Prva Petoletka and property issues of Jugorosgas in Leskovac.

Bubalo informed Shoigu on the adoption of the Serbian new Constitution and expressed thanks for Russian support in the process of solving Kosovo-Metohija issues.

He stressed that it was agreed that the first next session of the joint committee will take place by the end of March 2007, after ratification of free trade agreement.

Apart from Bubalo, the Serbian government delegation in Moscow comprises Assistant Minister of Energy and Mining Slobodan Sokolovic and Aleksandar Vlajcic, Deputy Minister of Economy Mihailo Vesovic, Deputy Minister of International Economic Relations Dragan Penezic, advisor in the Ministry of Finance Slavica Visnjic and director at NBS Zorica Jankovic.