IMF forgives debt, lends more to Serbia
The International Monetary Fund (IMF) has written off 550 million dollars of Serbian debt relating to Kosovo while agreeing to pump in more money into Serbia after Serb government agreed to scale back the crisis hit country’s massive public sector.
Last year, Serbian government has asked the IMF to relieve the country from paying Kosovo’s debts because it has no means to collect taxes due to a violent grip militant Albanian separatists have imposed on this Serbian province.
Serbian Minister for Economy Mladjan Dinkic said that writing off of Kosovo debt does not mean that Serbia is recognizing Kosovo as an independent state that the violent ethnic Albanian separatists hope for.
“The sovereignty of a state is one thing and fiscal policy another,” Dinkic said.
In addition to the Kosovo debt deal, the IMF also agreed in a meeting with Finance Minister Diana Dragutinovic and Economy Minister Mladjan Dinkic, that Serbia would slash public sector spending in 2010 instead of hiking taxes.
Serbian PM Cvetkovic, left, and Dragutinovic
In exchange, the IMF would allow the Balkan country to widen its budget deficit to 4.5% of gross domestic product from a previously agreed 3%, the agency said, citing sources close to the negotiations.
Under the agreement reached late Thursday, the IMF would soon grant Serbia a $500 million loan and boost its coffers by an even larger sum next year.
The report did not clarify whether the money was in addition to a EUR3-billion standby arrangement the IMF approved in May under a 27-month program.
Serbia has already drawn down EUR788 million from that arrangement.
The former Yugoslav republic has been battered by a sharp fall in foreign investment and a ballooning budget deficit as a result of the global financial crisis.
Its economy is expected to shrink by 6% in 2009, an abrupt turnaround from the 6% growth forecast before the onset of the crisis late last year.
A visiting IMF delegation headed by Albert Jaeger is due to hold a meeting Friday with Serbia’s deputy prime minister for integration into the European Union, Bozidar Djelic.
August 28, 2009
SERBIANNA | AKI | AFP
take more money from them, so they can have more control over Serbia, well done Tadic.
Veljkovic, welcome back.
What do you think will happen at the next election? I have a horrible feeling that Tadic will manage to get back in. All the promisses of EU membership again. Funny thing though, BNP pary is gaining support in England and they want out of EU while the Serbs are dying to get in.
Yes that is how they enslave people,good to have you back Veljkovic.
Always seeing the negative side of things as of humans!
Daniel.
You are wrong my friend i always look for the positive,but i sometimes lose faith in my fellow man when i see what they are capable of.
Thanks Dony, nice to hear from you.
What do you mean Daniel?