WB: Budget support loan only after deal with IMF

WB: Budget support loan only after deal with IMF

The government will be able to use 40 percent of the budget support loan for the things that it already financed in the previous year, Verheijen said in a statement published in the Monday issue of Belgrade-based broadsheet Politika.

The remaining 60 percent of the loan will be allocated for future expenditures such electricity imports and agricultural subsidies, he specified.

We hope that the loan could be granted before the bank's annual meeting in October, he said.

Asked to name the requirements for Serbia to get the budget support loan, he answered that it is important for the government to take serious steps forward in resolving the status of enterprises in the process of restructuring.

"Minister (Dušan) Vujović told us that the government will give these enterprises another month to come up with a plan that it will then assess. This means that their status will not be resolved before mid-October, and we cannot agree on details concerning the budget support loan before the government takes concrete steps,"Verheijen said.

Previously, we were ready to grant you this loan even without the agreement with the IMF, but it is no secret that Serbia's fiscal situation is getting worse due to floods, the lack of economic growth, but also the political situation in Europe, he added.

In these circumstances, we cannot grant you the loan without the agreement with the IMF. This agreement is also important for you because of international borrowing, the WB country manager for Serbia said.

The Serbian government has enough money for financing the budget this year, and if it reaches the agreement with the IMF, it will secure the funds that it lacks and avoid a negative scenario in 2015, he explained.

Over the course of the next year, the government has to make savings worth 1.5 percent of GDP, and it could do this only through spending cuts, he said, noting that it is possible to achieve this by reducing salaries, pensions, and subsidizing agriculture in order to boost production.

The government is currently making a combination of these three measures, the WB country manager for Serbia said.