November 16 2008
Serbia has become the latest eastern European country to seek support from the International Monetary Fund, securing a USD 516 million standby loan to help stabilise its economy and boost investor confidence.Unlike Hungary and Ukraine, which want immediate access to huge IMF loans.
Serbia says it will use the money only to avert any as yet unforeseen difficulties, The Irish Times reported.
“We’ve reached a 15-month standby agreement,” said Serb finance minister Diana Dragutinovic. “This programme will allow us to draw funds only if we need them. We believe we will not need the money… It will strengthen foreign investor confidence, while giving us all a sense of security.”
Serbia’s dinar currency and foreign reserves have slumped in the last month, driving it into talks with the IMF, and analysts have warned of economic problems and a possible run on the dinar.
The Serb central bank announced yesterday that growth in 2009 would slow to 3 per cent from 7 per cent this year, down from a previous forecast of 3.5 per cent and, as part of the IMF deal.
Belgrade agreed to cut government spending. As a result, Serbia is expected to reduce its budget deficit and rate of inflation.
“Serbia should be able to withstand financial difficulties that are coming but this will very much depend on whether Serbia implements much stronger and more credible policies than in the past,” said the head of the IMF mission to Belgrade, Albert Jaeger.