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UPDATE 1-Serbia seeks EU help on debt roll overs

Published 03/23/2009, 01:21 PM
Updated 03/23/2009, 01:24 PM
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(Updates with quotes, background)

BRUSSELS, March 23 (Reuters) - Serbia said on Monday it would seek European Union backing this week to persuade foreign banks to roll over 5 billion euros ($6.8 billion) of private debt and on a macro-economic support package for 2010.

Serbian Deputy Prime Minister Bozidar Djelic said he would meet EU Economic Affairs Commissioner Joachin Almunia on Wednesday before meeting banks from EU states later in the week.

"We will be having this week, on Friday, a meeting with the major banks present in Serbia and our suggestion would be for this year to have a roll over of the private debts that those banks have in Serbia," Djelic said.

"The total worth is about 5 billion euros, and in addition to this, for them to participate in the closing of the budgetary gap for this year," he said, adding that Serbia was asking the European Commission for its support in discussions.

Djelic said foreign banks had made big profits in Serbia.

"We believe that they too should show an element of solidarity because we have a common interest in order to go thorough this crisis with the economic capacity of Serbia being preserved."

Djelic said Serbia would also discuss with Almunia plans for a macro-financial support package for 2010. He said Belgrade proposed allocating 120 million euros of EU funds for Serbia this year for targeted budgetary support.

Djelic spoke after meeting EU Enlargement Commissioner Olli Rehn, who said he had assured Serbia of EU backing.

"I can say that the Commission is currently exploring the possibility of providing some kind of budgetary support for Serbia in order to help maintain macroeconomic stability," Rehn said.

He said such a move would be an important sign of solidarity with a country seeking to join the European Union.

Serbia's central bank governor will meet the 10 biggest creditors of the country's private sector banks in Vienna to ask them to maintain their lending in 2009 and 2010.

The meeting will also be attended by representatives of the International Monetary Fund, Serbia's Finance Ministry and the European Bank for Reconstruction and Development.

A pact with creditors would help Serbia prevent capital outflows in a year when up to 5.5 billion euros of debt matures.

Serbia says it also needs at least three billion euros to plug its budget holes and finance the current account deficit and up to 1.5 billion euros on top of that for the smooth financing of its 2009 budget. (Reporting by David Brunnstrom)

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