Serbia doubles size of appeal to IMF

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The Independent Online

Hit hard by war, sanctions and now the international economic crisis, Serbia said yesterday that it will need even more assistance from the IMF, provoking renewed fears for the health of other, larger, Balkan economics such as Romania and Bulgariam, both EU members and with much western investment at stake.

Serbian economics minister Mladjan Dinkic said his country was raising the amount it is bidding for from the Fund, to E3bn, and is seeking permission to run a bigger budget deficit: "I think the IMF will grant E2 billion for this year and E3 billion for two years," Mr Dinkic declared.

Some E530m in assistance was granted by the IMF in January. The region has seen a drying up of private sector financial flows from the advanced economies that has left Serbia, and other nations, with no other source of funding than the IMF for their trade deficits and growth.

Prime Minister Mirko Cvetkovic said the funds sought from the IMF would be used mostly to cover foreign currency reserves to stabilise the ailing currency.

The growth of this 'financial protectionism', where western banks repatriate funds, has been major factor in the latest wave of national economic crises in the region. Serbia, like most of the former states of Yugoslavia is hopeful of eventually joining Slovenia in the European Union.

However the German chancellor, Angela Merkel said that the EU needed a "consolidation phase" before adding new members.