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“Support to budget depends on political stability”

Loup Brefort, until recently head of the World Bank in Serbia, says the financial institution is currently considering granting a USD 200mn loan to Serbia.

In an interview for Belgrade-based weekly NIN, Brefort said support to the state budget depends, among other things, on the country’s political stability.

The World Bank does not want to meddle in government policy, but any political instability can negatively affect the economy. If the bank does not know what to expect, it cannot continue to support the budget, said Brefort.

If the minister of finance is replaced, the new minister would take some time to become informed about what has been agreed, and we would also need some time to see the policy being implemented, so this would definitely mean postponing the loan by a few months, perhaps three to five, he explained.

In case of new elections, the delay would be much longer, added Brefort.

Speaking about the conditions for granting Serbia the loan, he recalled that the government must implement its action plan for resolving the status of companies in restructuring.

We do not want to give a loan that would just further increase a country’s debt, so we are analyzing the government’s plan for reducing the debt over the next two to three years. I expect a decision from Washington in the coming weeks, said Brefort.

He said he is personally optimistic about Serbia’s chances of getting the loan, because the general consensus is that the planned reform of state and public companies is a good and necessary measure.

Source B92