Vecernje novosti daily - We shall repay creditors earlier, November 21, 2007

Mr. Janko Guzijan, State Secretary

Serbia will refinance a part of its debt to the London Club next year – Mr. Janko Guzijan, State Secretary in the Ministry of Finance, told Novosti daily. Mr. Guzijan explained that the main reason for this is that interest rate on the restructured debt toward the London Club will soar from 3.75 to 6.75 percent in 2009, which was stipulated by a previously ratified agreement.   

The Ministry of Finance has the information that we may achieve more favorable conditions concerning the interest rate on capital markets, and can therefore save money from the budget in the long run – Mr. Guzijan said. – Currently, overall debt to the London Club of creditors amounts to USD1.07 billion, and the last installment to the Club matures in 2024.

The state secretary expects that this operation will improve the country’s credit rating, which will also send strong signals to international and domestic financial public. He recalled that the proposed 2008 budget, which should be adopted by 15 December, was tailored primarily in line with previously assumed obligations, but also includes some new programs of the Government.

From the macroeconomic standpoint, the proposed budget will not resolve economic disequilibria in the next year, which is something to be done within the next three years, according to Memorandum on the Budget – Guzijan said. – This means that at the end of the three-year period the inflation will be cut down to four percent and current account deficit to under 10 percent, and this will be the benchmark against which work of the Ministry of Finance and the Serbian Government will be measured.

He also underscored that the Ministry of Finance has leverages to control budget spending, which it deployed this year – hence the RSD 39 billion surplus in the first 10 months of the year. However, Guzijan said that citizens and companies should be aware that if the macroeconomic situation is disrupted, the Ministry of Finance would intervene with additional saving in order to prevent disturbances in aggregate demand and supply.

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Vecernje novosti daily - We shall repay creditors earlier, 21.11.2007