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FACTBOX-With currency falling, Serbia seeks new IMF deal

Published 11/05/2008, 09:40 AM
Updated 11/05/2008, 09:42 AM

BELGRADE, Nov 5 (Reuters) - Serbia's officials say they are negotiating a financial arrangement with the International Monetary Fund to help the Balkan state counter effects of the global financial crisis and bolster its credit rating.

Here are some key facts about Serbia's arrangements with the IMF and about the country's economy.

* The IMF mission arrived in Belgrade in late October to advise the government on its 2009 budget.

* Serbia says it will not need extra funding in the next 6-12 months, but could use an available $700 million of its IMF quota if there is a sudden halt in investment inflows.

* Worries focus on external financing for the country, which has a current account deficit of 18.5 percent of gross domestic product and saw almost 12 percent wiped off the value of its currency between the start of October and early November. A fall in the dinar's value makes it more expensive for business and consumers to meet obligations in foreign currencies.

* Since 2000 when the West embraced Serbia after nearly a decade of isolation, the Balkan country has had two financial programmes with the IMF.

* In June 2001 the IMF approved a $249 million stand-by loan to Serbia and Montenegro, at the time the two remaining partners in their shrunken Yugoslav federation.

* In 2002 Serbia signed a three-year loan deal worth $962 million with the IMF and its completion was the main condition for the Balkan state to win an additional 15 percent debt write off -- equivalent to $700 million -- from the Paris Club of creditors.

* Serbia's dinar currency, currently trades at two-year lows of 85.70-86.00 to the euro. The central bank spent 260 million euros of its more than 9.4 billion euros in hard currency reserves defending the dinar in October.

* Following reports on the financial sector crisis in the West, Serbs withdrew more than 500 million in savings deposits from banks. Serbians lost more than $4.0 billion in private savings in the early 1990s and the government is repaying the debt with a 14-year bond maturing in 2016.

* In 2007 Serbia's economy grew by 7.5 percent. This year's growth is seen at around 7 percent but the global credit crunch is expected to weigh on activity and the government has cut its 2009 growth forecast to four from six percent.

* Standard and Poor's rates Serbia BB- with a negative outlook and had seen fiscal expansion as the main threat. Their representatives will visit Serbia later this week before deciding a change in credit rating or outlook. (Reporting by Ivana Sekularac, Editing by Gordana Filipovic and Patrick Graham)

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