Serbia plans to go ahead with its first Eurobond this autumn and is committed to meeting its 2011 budget deficit target of 4.1 percent of GDP but still needs a stand-by loan from the IMF as a buffer, Deputy Prime Minister Bozidar Djelic told Reuters on Thursday.
He said the former Yugoslav republic would start talks with the International Monetary Fund this month, aiming to secure a loan of probably around 1 billion euros as early as October.
"The eurozone is our biggest market, almost all banks in Serbia come from the eurozone, so definitely whatever happens in the eurozone is highly relevant for Serbia," Djelic said in an interview. "For the time being, there is no direct impact."
He spoke a day after Prime Minister Mirko Cvetkovic held an urgent meeting of his ministers and central bank officials to discuss how to prepare Serbia for a possible new crisis, after suffering a sharp impact from the 2008 global financial crisis. Serbia's central bank, citing the uncertain impact of the current global economic instability, did not cut interest rates as expected on Thursday.
Djelic said the latest figures showed Serbia's total debt level at 43 percent of GDP. "We will buttress this commitment by having, this autumn, negotiations with the IMF in order to have a new arrangement," he said.
Djelic said an IMF delegation was due to visit Belgrade from August 18, and said Belgrade hoped to conclude a stand-by deal of about a billion euros. "The second half of August will be dedicated to negotiations. We will see if we are able as early as October to strike a deal," he said. "We will have a precautionary deal, which means there will be no drawing immediately but a possibility to transfer that programme into a drawing one if such a need arises."
Serbia's previous 3 billion euro stand-by arrangement with the IMF expired this year. "We actually drew less than half of the planned sum, so we are conservative and we always make sure we have room for manoeuvre," Djelic said.