(Incorporates ECONOMY-SERBIA/FORECAST and ECONOMY-SERBIA/CENTRALBANK, adds details)
By Gordana Filipovic
BELGRADE, Feb 13 (Reuters) - Serbia's economy shrank three percent year-on-year in the last quarter of 2008, and is now seen growing only 1.5-2.0 percent in 2009 as the impact of the global crisis deepens, the central bank chief said on Friday.
The government still has an official forecast of 3.5 percent growth for the year and plans to revise the figure next month.
Governor Radovan Jelasic said falling domestic and global demand, declining foreign investment and shrinking credit activity would lead growth rates lower.
"Our optimistic forecast for GDP growth this year has been lowered to 1.5 to two percent with a disproportionately higher risk that growth would be lower," Jelasic said.
The economy grew 5.5 percent in 2008, or 0.3 percent down from an earlier estimate, and its seasonally adjusted growth in the last quarter of the year was minus three percent year-on-year, Jelasic told a news conference.
"This year has not started in the best possible way," he said. "Inflationary pressures are high, (currency) depreciation pressures have continued, the outflow of capital continues and the expansion of fiscal policy in the last quarter of 2008 resulted in January inflation of 3 percent."
On Thursday, the central bank left its key policy rate at 16.5 percent. The bank cut its two-week repo rate last month from 17.75 percent, but further easing was not in sight.
"A new cut in the repo rate can take place only if the fiscal policy is tight and if the government honours its commitment to raise state-controlled prices by 13 percent plus/minus two percent," he said.
The bank also eased rules to boost liquidity and bank lending, and commercial banks will no longer need to set aside reserves for loans to corporate clients granted under a 1.2 billion euro government-led stimulus plan.
Lending to households will be relaxed and retail clients will not be required to deposit 30 percent against new loans.
Lower capital inflows and some capital flight have led the
dinar down
To alleviate the impact of the global economic crunch, Serbia has asked the European Commission for 400 million euros in macro-financial assistance and $300 million from the World Bank to bolster its budget and has already won a $520 million stand-by loan from the International Monetary Fund.
IMF Deputy Managing Director Murilo Portugal said this week the stand-by loan was not enough to finance the adjustment and stability Serbia has been looking for and the government also signalled it would be seeking more IMF cash.
Talks with the IMF are set to resume next month with the lender's mission due in Belgrade to discuss a new deal, Jelasic said, adding that a new programme would likely lead to new limits on funds available for central bank market interventions.
"Any change needs to be approved by the IMF Board," he said. "If we have a new arrangement in March and the IMF board approves it in April, then it means a new programme and new limits." (Editing by Adam Tanner and Stephen Nisbet)