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The Government of the Republic of Serbia

In the service of citizens

Government to launch loan programme for metals industry

Belgrade, 24 February 2005

Serbian Minister of Economy Predrag Bubalo announced today that the government will soon launch a loan programme allowing metals firms to lease domestically produced machinery and equipment.

He voiced hope that the state will be able to write off all the debts of 27 companies poised to be restructured and that creditors will be repaid from privatisation receipts.

Bubalo said at a meeting with metal union representatives that this industry is lagging behind when it comes to privatisation even though it consumes around 50% of the state’s total subsidies. He also announced tenders to privatise Trstenik-based Prva Petoletka and 14. Oktobar.

Bubalo explained that the metals industry received 2.5 billion dinars in subsidies out of a total 5.6 billion dinars approved in 2004, and he added that this year the industry got around one half of the approved 996 million dinars of economic subsidies issued by the government.

According to him, all metal processing sectors in Serbia ended 2003 and 2004 with negative results and trade gaps.

Out of 1,107 companies privatised so far in Serbia, only 71 were from the metals industry, said Bubalo and added that the Share Fund has engaged in the share trading of 235 companies, with only 55 of those coming from the metals industry.

Bubalo also said that there is a suitor interested in the Bor mining complex (RTB), adding that a serious effort to privatise Kragujevac-based carmaker Zastava Vozila will be launched in March.

Bubalo added that the issue of Zastava's €400 million debt has been resolved. The claims of the Italian Fiat were also included in that sum.

Speaking about inflation, Bubalo said that all businessmen should seriously consider the issue of inflation in an effort to keep it stable.

He said that the exceeding of the last year's inflation plan was largely influenced by growth in the industrial sector of 7.1 percent. He stressed that the influence of the processing industry was very important because it recorded 9.6 percent growth, which is a great success and a signal of the industry's recovery.

The Minister voiced hope that by further restriction of public spending a surplus in the state budget will be achieved this year. He added that in mid 2005, a budget revision will be considered.

He said that it is very good that last year's budgetary deficit was stopped at 1.7 percent of GDP instead of the planned 3.6 percent, which opens up possibilities for further restriction of public spending.

By the end of last year, 253 companies in Serbia underwent the privatisation process, Bubalo said and added that in December alone 14 tenders were invited and that interested partners exist for 12 of them.