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The Government of the Republic of Serbia

In the service of citizens

World Bank approves another $300m for reform implementation

Belgrade, 2 February 2009

Deputy Prime Minister Bozidar Djelic stated in an interview for today’s edition of the Blic daily that at the World Economic Forum in Davos he asked the World Bank for a further $300 million of assistance to Serbia.

Djelic said that this amount should be added to the $600 million which the bank has already approved, specifying that one-third of the funds will be invested in infrastructure and the remaining portion in education and science.

He said that one of the conditions for this is Serbia’s economic stability, for which, according to economists’ estimates, around €1 billion will be needed for the necessary reforms.

Djelic stressed that international financial institutions only finance countries with sustainable policies, which Serbia will have, provided the reforms are implemented.

We must reach full agreement with the World Bank about the $600 million if we are to get the additional $300. Of the $600 million, $200 million will be programme loans supporting the budget, but their use will be conditioned by the state’s reform measures, Djelic explained.

He noted that in the upcoming weeks Serbia has to reach agreement with the World Bank about the reform matrix, that is, the list and timing of reforms which will affect all key segments of society.

The Deputy Prime Minister said that the reforms mostly concern public companies, the pension system, science and education, adding that according to the agreement, harmonisation of the matrix with the World Bank should be completed before April.

As for Serbia’s odds of getting the necessary sum, Djelic recalled that certain moves have already been made and recalled that the IMF approved a programme for Serbia in January.

He stressed that the precondition for additional sources is an active and prompt contractual relation with the IMF, adding that its current support stands at €402 million, but it will not be a problem to get an even three times larger sum should the need arise.

Djelic said that €1.6 billion has been secured to maintain the stability of the dinar, adding that talks with the European Commission began back in October.

According to him, unlike the IMF funds, which can only be used to strengthen the dinar reserves, the European Commission funds can be used to compensate a loss in tax or privatisation revenues.

We have been assured that the European Commission will assist us with an even larger amount, said Djelic adding that in order to realise key projects, the European Investment Bank has secured an additional sum of €250 million for SMEs.