IMF approves $520 mln loan to help Serbia through credit crisis

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BELGRADE, November 14 (RIA Novosti) - The Serbian government announced on Friday that it had reached a deal with the International Monetary Fund on a $520 million standby loan, which the country will be able to draw on in case of emergency over the next 15 months.

The loan, which requires final approval from the IMF board of directors and the Serbian government, was agreed late on Thursday during a visit by the IMF mission chief in Serbia, Albert Jaeger.

"This stand-by arrangement, reached out of precaution... will give us the possibility to withdraw funds only if we need them, but we will do our best not to use them," Serbian Finance Minister Diana Dragutinovic told a news conference.

"The arrangement with the IMF counters the possible effects of the global financial crisis, strengthens the confidence of foreign investors and creditors and gives the feeling of security for all in Serbia," she said.

Jaeger, who spent over two weeks in Serbia discussing the loan, said the government's fiscal policies in recent years have failed to "use good times to prepare for a change in the cycle."

Serbia's national currency, the dinar, fell 10% in October as foreign investors sold off assets in the Balkan region. The government, which is running a budget deficit of 2.7% of GDP, has lowered its economic growth forecast for next year from 7% to 3%.

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