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The Government of the Republic of Serbia

In the service of citizens

Government to provide enough funds for economy

Belgrade, 19 January 2009

Serbian Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic today asked representatives of the seven biggest Serbian banks to cooperate with the government and the National Bank of Serbia concerning the provision of funds for the Serbian economy during the global financial crisis.

After meeting with bank representatives, Dinkic told the press that this cooperation would contribute to a decrease in interest rates, adding that this year the government must provide a viable economic growth of 3.5%, increase employment and provide export incentives.

Dinkic explained that last year banks provided €3.8 billion of loans to the Serbian economy, which will not be possible in 2009, so the government must help.

The Minister said that the government considered three models concerning the provision of funds for Serbian economy

Dinkic said the first model envisages that the Development Fund sets aside RSD 10 billion and the commercial banks another RSD 10 million, adding that interest rates must not be higher than 5% to 6% per year.

According to the second model, the government, in cooperation with the National Bank of Serbia, will adopt a programme for a decrease in interest rates for bank loans.

The third model envisages that the government will secure €480 million of foreign investment for SMEs, said Dinkic.

The Minister said that loans will be provided from the European Investment Bank to the amount of €250 million, from the German Development Bank to the amount of €100 million, from the European Bank for Reconstruction to the amount of €100 million and a credit line approved by the Italian government amounting to €30 million.

He also said that ways to reduce interest rates were discussed.

Dinkic pointed out that the number of workers in companies that get loans would have to remain the same or go up, noting that exporters will be given priority.

He also announced that a contest to find diplomats with special skills in economics will be announced by the end of January. The successful applicants will be sent, in cooperation with the Foreign Ministry, to cities with large financial sectors, such as Chicago, Munich and Stuttgart.