Govt. approves economic crisis measures
29 January 2009 09:14 -> 15:30 Source: B92, Beta
BELGRADE -- The govt. has adopted a set of measures for cushioning the impact of the economic crisis, whereby banks will approve loans to the tune of EUR 1.3bn.
Last night's meeting (Tanjug)
Prime Minister Mirko Cvetković told a press conference that the goal of these measures was growth of production and export through increased economic solvency and consumer purchasing power."The funds aren't coming from the budget, but are incentive funds that will enable bank solvency to ensure economic solvency," he said. These measures were presented on Wednesday night by Cvetković, National Bank of Serbia Governor Radovan Jelašić, Finance Minister Diana Dragutinović and Economy Minister Mlađan Dinkić to President Boris Tadić. Cvetković confirmed that measures had been prepared to support domestic production and the purchasing of domestic products. The package of measures is worth some EUR 1.3bn, and calls for state subsidies for interest that banks will charge for giving loans to exports and production that replaces imports, Cvetković told TV Pink. He said that the state would not participate in choosing specific beneficiaries for the assistance, but that it would have a say in what sectors were to supported, but that the final selection would be left to the banks themselves. Cvetković explained that the final interest rate that credit users would pay would be about six percent, 2.3 percent of which would be subsidized from the budget. Earlier, the Beta news agency reported that the measures will provide commercial banks with state assistance to approve EUR 1.3bn in loans this year. State funding will encourage banks to finance businesses, withdraw additional funds from their head offices, and get the population to buy local products by providing credit. The government's package envisages loans for subsidizing liquidity, investment, consumer loans, and credit lines that the state plans to obtain from the international financial institutions (around EUR 480mn) for financing small and medium enterprises. According to the cabinet, the first soft loans are expected to be approved in early February. Separately, the government intends to approve an additional EUR 1.6bn in loans this year to bolster the economy and mitigate the effects of the world crisis. This money will be used to ensure that interest rates do not exceed 5.5 percent per annum. The funding will cover a one-year period and could be also used for refinancing existing loans with the same banks. The cabinet will also allocate EUR 179mn for investment loans. Of this, the Development Fund will distribute 30 percent and commercial banks 70 percent. Repayment will be due in three to five years, with a grace period of between six and 12 months and annual interest approximately four percent (Euribor plus four percent). The Guarantee Fund is to guarantee 75 percent of the loans. The third measure is the direct subsidizing of consumer loans for purchasing Serbian produces, including the Fiat Puntos, farm machinery, furniture, flooring, and home appliances. As part of its bid to shore up the economy, Serbia will rely on EUR 480mn from foreign credit lines, mostly to finance small and medium enterprises.
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