World Bank approves $500 million for Serb budgets

The World Bank agreed with Serbia on Friday a $500 million loan to back its 2009 and 2010 budgets, and the money will be disbursed right after parliament ratifies the loans. The funds comprise $200 million in budget support for 2009 and $300 million for Serbia's 2010 budget. Finance Minister Diana Dragutinovic told a news conference, adding that other conditions include reforms of budget controls and audit as well as sustainable fiscal policy.
As part of its 3-billion euro loan agreement with the IMF, Serbia has committed to reforming its pension, health and education systems, keeping pensions and public sector wages frozen through 2010 and cutting public spending to 41.4 percent of GDP from 44.5 percent this year. Serbia will be repaying the funds over 20 years, with an eight-year grace period, at 6-month Euribor and a 0.17 percent borrowing fee. "To make it simple, it's one percent," Dragutinovic said.