Serbia "heavily indebted" country

Belgrade, March, 23. 2010 (Source: B92) - Serbia owes euro 22.8bn to foreign creditors, according to indicators of the world bank and international monetary fund. The national bank of Serbia and authorities are trying to play down the severity of the situation, claiming that Serbia is among the countries that have middle degree of indebtedness, where the debt's participation in the GDP is 74.1 percent. That is six percent under the mark that separates Serbia from countries in high debt, economist Mlađen Kovačević told daily Večernje novosti. He said that in the last two years, the state of foreign debt has drastically worsened, and that the taking out of loans will continue in this and the next year, which can lead to a long-term debt crisis. Kovačević also believes that the total debt needs to worry Serbia the most, even though the central bank insists that private debt, which is the debt companies have abroad, should not be taken into consideration. "i think that there is reason for concern. What will happen if Telekom Serbia, (the state-owned telecommunications company) has problems and is not able to pay off its loan? The scenario is simple. Citibank or any other creditor the company is indebted to can take over our national company at a minimal price,” Kovačević said. He explained that the ability to pay off loans will depend mostly on the strength of the industry, which is the only source that can secure foreign currency. “As far as the state is concerned, it can always find a way to regulate its obligations. It can reprogram debts, take out new loans, which it has been doing for years. But that also has a price,” Kovačević said, adding that Serbia owes euro 6bn based on interest alone for a period of four to five years. He believes that the state will be going even further into debt. “There are already indications that the Chinese will give euro 1bn of loans, and the Russians will give euro 800mn. The sale of Telekom is also being announced by the end of the year, at a time when the crisis is still shaking Europe, Which means that a lot less money can be gotten for the company than during better times,” he said.
"The state is continuing to spend its 'family treasures', to sell out everything it owns. The privatization of EPS (electric company) is also being mentioned, with the Czech as the main interested party, in other words, a state institution. How could it possibly be that a foreign state company can handle things better than ourselves in our own house," this expert wondered. "Since January 1, 2001 until today, the state took euro 70bn based on privatizations, foreign loans… where that money went, i cannot see. In nine years, we have not built a single new bridge, corridor 10 has not been finalized, nor any other investment of any significance," Kovačević added. He also noted that Serbia's situation is "not far from the Greek scenario", because Serbia is spending "25 percent more than it earns".