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The Government of the Republic of Serbia

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Tenders to be put out for advisors for Telekom, Zastava Automobili in March, April

Belgrade, 13 March 2008

Serbian Minister of Economy and Regional Development Mladjan Dinkic announced today that the tender for the advisor who will organise the initial public offering for Telekom will be put out on March 30, and for Zastava Automobili on April 15.

Dinkic told a press conference that the deadline for applying for the tenders will be June 15 at the earliest, which will give investors a month to contemplate and decide whether they will invest.

The Minister announced that next week representatives of a large international company will visit Zastava, which will be a huge surprise because that particular company has never previously shown interest in the Kragujevac-based car maker.

Speaking about the tender for Telekom’s public offering advisor, Dinkic said he expects the privatisation strategy to be adopted by a new government in autumn.

He added that after Telekom, a tender for an advisor will also be put out for the pharmaceutical company Galenika.

According to him, the privatisation advisor for the national air carrier Jat Airways is finishing up his work, adding that the tender for this company will most likely be put out in late May and that six large companies are interested in Jat.

Dinkic announced that the final auction in the tender for the sale of former Genex located on Mt. Kopaonik and in Belgrade, will be held on March 31, and the asking price at the auction will be the highest bid in the tender.

He added there was huge interest in the Belgrade portion of Genex and that the tender documentation for facilities on Kopaonik was purchased by six companies.

Dinkic also said that he prepared a written proposal for the government regarding the beginning of talks with creditors about halting the payment of Kosovo’s debt, but added that the proposal will be put forward after parliamentary elections.

He said that if agreement is reached with creditors, Serbia can stop settling Kosovo’s debt without recognising Kosovo and added that the issues of sovereignty and fiscal sovereignty are two separate things.

If this agreement is reached, around $1.24 billion which Serbia would have to pay off as part of Kosovo’s debt will be reallocated to Serbs in Kosovo.

He recalled that this year Serbia is to pay back $90 million of this debt. Two of the largest instalments are due in March and September. Regardless of whether the agreement is reached or not, the March instalment will have to be paid nevertheless.

If we reach this agreement with the creditors, Serbia will be given back $340 million which it has so far paid to settle Kosovo’s debt.

He added that the upcoming parliamentary elections scheduled for May 11 will be as important as the ones held in 2000 and reiterated that Serbia has no alternative but to enter the EU because it will become stronger and able to fight for Serbs in Kosovo-Metohija.