Serbia, IMF start loan talks in Belgrade

The government has this Monday started negotiations with the International Monetary Fund, IMF, over a new standby arrangement. Serbia is set to seek a new loan of EUR 2bn at most, along with the already approved EUR 520mn. The money is planned to go toward strengthening of the country's hard currency reserves and the stability of the Serbian dinar (RSD). Serbia, IMF start loan talks in Belgrade Several government ministers also believe that the arrangement, if agreed upon, will allow for more favorable loans to be taken out with other institutions, in order to cover the budget deficit and spend on investments. The negotiations with the IMF mission arriving in Belgrade are expected to be difficult, since it is already known that they will ask that Serbia decreases public spending, when budget revenues for the first two months of this year dropped compared to the planned figures. On Friday, the government adopted a united strategy for the talks, and PM Mirko Cvetkovic said it would be combined – aiming at increasing the budget deficit, and lowering some spending. However, his ministers commented on different figures in public, so it remains unclear what amount of money Serbia will seek to obtain from a new IMF loan. It is believed that the number will not exceed EUR 2bn. "Macroeconomy-wise, we need assistance to cover this year's budget deficit, which will, as things stand, be significantly higher compared to the projected memorandum on the budget and fiscal policy for 2009," said Trade Minister Slobodan Milosavljevic. "We need between EUR 1.5-2bn in order to go through this difficult year without major turbulence," said the minister. Deputy Prime Minister Bozidar Djelic on Monday stated that he expects talks with the IMF to end by late next week and that arrangements will be agreed for 2009 and 2010. “I expect this round of talks to end next Thursday or Friday,” Djelic told reporters at a meeting on recession in Serbia, which is under way at the Belgrade Hyatt Hotel. Dinkic expects EUR 3bn Also on Monday in Belgrade, Minister of Economy and Regional Development Mlasan Dinkic stated that he expects a two-year arrangement to be reached with the IMF on the loan of approximately EUR 3bn. "I expect an arrangement to be attained with the IMF on EUR 2bn loan for strengthening our foreign currency reserves in 2009 and another billion for 2010," Dinkic said at a roundtable "Serbia in 2009 - Recession, Growth or Stagnation". "This will be more than enough money for Serbia to maintain the stability of its currency," the minister said, adding that he expects the negotiations to be over by the middle of next week. Dinkic pointed out that, having spoken to the IMF representatives, he concluded that they share the same position when it comes to effect of the global economic crisis on Serbia and measures that are to be taken about it. He also said that "this year will not be easy one for Serbia, but it will be far from catastrophic".

Serbia, IMF start loan talks in Belgrade

Several government ministers also believe that the arrangement, if agreed upon, will allow for more favorable loans to be taken out with other institutions, in order to cover the budget deficit and spend on investments.

The negotiations with the IMF mission arriving in Belgrade are expected to be difficult, since it is already known that they will ask that Serbia decreases public spending, when budget revenues for the first two months of this year dropped compared to the planned figures.

On Friday, the government adopted a united strategy for the talks, and PM Mirko Cvetković said it would be combined – aiming at increasing the budget deficit, and lowering some spending.

However, his ministers commented on different figures in public, so it remains unclear what amount of money Serbia will seek to obtain from a new IMF loan. It is believed that the number will not exceed EUR 2bn.

"Macroeconomy-wise, we need assistance to cover this year's budget deficit, which will, as things stand, be significantly higher compared to the projected memorandum on the budget and fiscal policy for 2009," said Trade Minister Slobodan Milosavljević.

"We need between EUR 1.5-2bn in order to go through this difficult year without major turbulence," said the minister.

Deputy Prime Minister Bozidar Đelić on Monday stated that he expects talks with the IMF to end by late next week and that arrangements will be agreed for 2009 and 2010.

“I expect this round of talks to end next Thursday or Friday,” Đelić told reporters at a meeting on recession in Serbia, which is under way at the Belgrade Hyatt Hotel.

Dinkić expects EUR 3bn

Also on Monday in Belgrade, Minister of Economy and Regional Development Mlašan Dinkić stated that he expects a two-year arrangement to be reached with the IMF on the loan of approximately EUR 3bn.

"I expect an arrangement to be attained with the IMF on EUR 2bn loan for strengthening our foreign currency reserves in 2009 and another billion for 2010," Dinkić said at a roundtable "Serbia in 2009 - Recession, Growth or Stagnation".

"This will be more than enough money for Serbia to maintain the stability of its currency," the minister said, adding that he expects the negotiations to be over by the middle of next week.

Dinkić pointed out that, having spoken to the IMF representatives, he concluded that they share the same position when it comes to effect of the global economic crisis on Serbia and measures that are to be taken about it.

He also said that "this year will not be easy one for Serbia, but it will be far from catastrophic".