Serbia negotiates Russia's $1 billion loan amid uncertainty about conditions
By: DUSAN STOJANOVIC
Associated Press
10/29/09 8:35 AM PDT
BELGRADE, SERBIA — Serbia and Russia on Thursday began negotiating the conditions for a $1 billion (euro675 million) loan, which some fear is an attempt by Moscow to extend its influence in the Balkan country.
During his visit earlier this month, Russian President Dmitry Medvedev approved the credit to be used to finance Serbia's budget deficit and major infrastructure projects.
The terms of the loan were unknown, but the offer is widely viewed in Serbia as an attempt to enhance Russia's diplomatic and economic influence.
"We have received assurances that this will be a very favorable credit, but we'll have to leave it up to the Russian side to say what this 'vary favorable' means," said Serbia's deputy Finance Minister Zoran Cirovic.
Cirovic, who led a government delegation that traveled to Moscow on Thursday for the negotiations, said Serbia expects the loan would carry the same conditions as those offered by international financial organizations and other creditor countries.
The Russian money — along with Gazprom Neft's purchase of a 51 percent stake in Serbia's oil monopoly NIS last year, and the promised construction of a major Russian pipeline through the Balkan country by 2015 — are seen as an attempt by Moscow to bring Belgrade under its economic and political fold.
Serbia's Prime Minister Mirko Cvetkovic said $200 million of the offered Russian loan would be used to cover Serbia's budget gap, while the rest would go to various road and railway construction projects.
He also said Serbia is close to reaching a deal with the International Monetary Fund on the 2010 budget that would enable Serbia to access euro700 million of an emergency loan which has been frozen because of Belgrade's failure to plan spending cuts.
The IMF said in August it was blocking Serbia's access to the euro2.9 billion standby loan agreed in March.
The fund has insisted Serbia must reduce its budget deficit from the current 4.5 percent of gross domestic product to 3.5 percent next year. Serbian officials said they will propose a 4 percent budget gap for 2010.
