Source Pravda.Ru

Serbia hopes its loan arrangement with IMF be extended

An International Monetary Fund mission was expected to visit Belgrade this week for negotiations with government officials on extending loan arrangements with the Balkan republic, the IMF office here said Wednesday. The mission, due to arrive Thursday, follows Serbia's adoption earlier this month of a controversial pension law that falls short of IMF requirements.

Talks in Belgrade will likely be critical for IMF's sixth review of a three-year loan arrangement with Serbia.

In May, the IMF extended the US$994 million (Ђ835 million) loan arrangement to the end of 2005, giving Serbia time to cope with its budget deficit and growing inflation, the AP says.

That extension came with a package of key conditions for continued IMF support for Serbia's reforms, including privatization of the state-owned oil company NIS, currently underway, and for new legislation such as the pension law.

Serbia's parliament adopted the new pension law only after lawmakers from the Socialist Party of ousted President Slobodan Milosevic pushed several amendments through legislature, including those envisaging state pensions be upgraded twice a year to match Serbia's rising cost of living, instead of once annually as the IMF wanted.

Serbia's budget deficit last year was 32.6 billion dinars (US$533 million), or 2.2 percent of the gross domestic product, despite relatively modest salaries in the public sector that average US$320 a month.

Milan Kovacevic, Serbian government adviser for foreign investments, said Wednesday that Belgrade must push for a "positive outcome" of the talks with the IMF.

T.E.