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Friday, Serbia announced that the International Monetary Fund (IMF) has agreed to provide the country with a $516 million standby loan to aid in bringing about stability in the economy.

Serbia's Finance Minister Diana Dragutinovic said the deal is a 15-month standby arrangement. The minister noted that the deal will allow the country to draw funds when needed. According to her, the deal allows Serbia an opportunity to use the funds only if it actually needs them, adding that the country will try to do without them.

In a statement on the official website of the government, the minister said the deal will also help to boost investors and international institutions' trust in Serbia. Going forward, a policy of frugality will be implemented at all levels next year, starting from the state and municipalities to public companies and all the way down to all budget beneficiaries.

As directed by IMF, Serbia has agreed to lower the 2009 budget deficit to 1.5% of gross domestic product from 2.7%.

As the global financial crisis spreads, IMF had offered funds to Iceland, Ukraine, Hungary and Belarus to enable them to support their economies. Pakistan is also in talks with the international lender for money to avert a balance of payment crisis.

Governor of the National Bank of Serbia Radovan Jelasic said in order to increase saving, the central bank will not grant loans to the public sector and will intervene only to help overcome domestic or external shocks. The central bank chief also said additional measures will be taken to help control the banking sector, particularly its liquidity and foreign currency status.


Source :
1. IMF, Serbia Agree On $516 Mln Standby Loan Deal, 11/14/2008 7:50 AM ET