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The Government of the Republic of Serbia

In the service of citizens

Government recommendation to yield results soon

Belgrade, 18 June 2011

Minister of Economy and Regional Development Nebojsa Ciric today stated that the government’s recommendation to banks to allow loan restructuring to the economy will most likely yield first results within a short period.

Nebojsa Ciric

Author: Tanjug

Ciric told Tanjug news agency that the government recommendation will enable companies with a good perspective and good business operations, but which are currently in a liquidity crisis, to be granted a grace period for their current loans, which means they will only be repaying the interest rate, and not the principal sum.

The altered decision on the classification of banking investment, which the National Bank of Serbia (NBS) adopted on 16 June, prior to a government session, will enable companies to use money they would have otherwise used to repay the loans and redirect it to boost their product portfolio, conquer new markets and create new jobs, the Minister explained.

He stressed that this is not an imperative issued by the government, but a recommendation to banks, adding that it will be effective because consultations with the NBS were conducted beforehand.

The NBS realised that it is now important to extend a helping hand to companies by enabling banks to restructure loans on the basis of the altered decision on classification, which they were unable to do until now.

Therefore on the one hand, this measure maintains the stability of the financial system, and on the other it does not affect the capital adequacy of banks, and what is important to me as Minister of Economy is the fact that in essence, companies will be approved restructuring, Ciric stressed.

The Minister said that banks will invest their funds in companies and, therefore, they should be the ones to say whether a company deserves to be granted a loan or loan restructuring, or not.

I believe it would have been unfortunate and counterproductive if we ordered banks to automatically allow loan restructuring to everyone. Naturally, some companies will not be able to stay afloat and will go into bankruptcy, but I believe they will be relatively scarce, while the majority will feel huge benefits of this measure within a short period, Ciric noted.

The Minister added that the adoption of the recommendation was preceded by talks with the largest banks in Serbia, SMEs and various business associations.