Serbia Taps Loans From Russia, China
By <http://online.wsj.com/search/search_center.html?KEYWORDS=MARC+CHAMPION&ARTICLESEARCHQUERY_PARSER=bylineAND> MARC CHAMPION ISTANBUL -- Russia is set to lend €1 billion ($1.46 billion) to Serbia, according to officials on both sides, as Moscow seeks to expand its influence in the region and Belgrade looks for partners more free with cash than the European Union to help out during the economic downturn. Serbia's economy minister, Mladjan Dinkic, interviewed Monday on the margins of the International Monetary Fund's annual meeting in Istanbul, said the loan was expected; he declined to name the sum. Russian Finance Minister Alexei Kudrin said Serbia had asked for a €1 billion loan, including €350 million to cover its budget deficit, according to Russian state news agency RiaNovosti. "The EU is our strategic partner, but unfortunately they couldn't help us too much in the crisis -- they could only provide €100 million, €50 million this year and €50 million next," Mr. Dinkic said. "Obviously that is not enough for our needs." Mr. Dinkic said the terms will be agreed and the deal announced when Russian President Dmitry Medvedev visits Belgrade on Oct. 20. Russia has stressed that the date chosen for that visit is also the anniversary of the Soviet army's liberation of Belgrade at the end of World War II. The Russian loan would add to its growing influence in Serbia, which relies on Moscow's diplomatic support in the United Nations Security Council to resist the secession of Serbia's former province Kosovo. Last year Russia's state-controlled gas monopoly OAO Gazprom <http://online.wsj.com/public/quotes/main.html?type=djn&symbol=NRGP.RS> bought Serbia's major oil and gas assets and agreed to route its South Stream gas pipeline through Serbia. Russia is also considering multibillion-euro loans for Bulgaria. Though also hard hit by the global downturn, Russia still has substantial cash reserves that it built up before oil prices tumbled last year, though it hasn't followed through with loans offered to Ukraine and Belarus. The Russian money, with a similar package from China, will help fill out money from the IMF and the EU; the funds from the two powers are part of a strategy to find additional partners and sources of finance in the face of the crisis, Mr. Dinkic said. While EU membership remains Serbia's main goal, Belgrade knows that could take some time and the government doesn't meanwhile want to "put all our eggs in one basket," said Mr. Dinkic, a former governor of Serbia's central bank. China is becoming a major partner, he said, providing a €200 million concessionary loan to build a new bridge and highway section in Belgrade, with further projects amounting to a total package of €1 billion in coming years. China also has agreed to lend ex-Soviet Moldova $1 billion. The bridge deal will be run 60% by Chinese construction companies and labor, and 40% by Serbian, Mr. Dinkic said. Serbia has been hit by the global downturn as foreign investment and trade have dried up. Economic growth, as measured by gross domestic product, dipped to minus 4% in the first six months, though it has since stabilized and should pick up a little toward the end of the year, Mr. Dinkic said. The IMF predicts GDP growth of 1.5% for Serbia next year. Most of Serbia's crisis financing still comes from the IMF and the World Bank. The IMF has demanded public spending cuts to release further tranches. Write to Marc Champion at [email protected] http://online.wsj.com/article/SB125474330776764315.html#
