Serbia to invest €5bn to cope with coronavirus impact

Under a new aid plan, citizens will also receive a one-off payment

Serbian President Aleksandar Vucic

Serbia is planning on offering about €5bn in loans and subsidies to businesses to help them cope with the economic impact of the coronavirus, President Aleksandar Vucic said. As announced by Vucic, the state will also make a one-off payment of €100 to every Serbian citizen older than 18, or the entire electorate consisting of 5 million people.

The recovery program, which the president announced late on Sunday, would lead to an increase in the deficit this year that would be covered from financial reserves and borrowing. The deficit was originally forecast at 0.3% of economic output. The country’s economy will also miss its 4% growth target for 2020 and face a recession, but Vucic said Serbia should rebound to growth in 2021.

“We will have problems, but less than others,” Vucic told the Belgrade-based Prva TV, adding that under the plan, agreed with the IMF, Serbia’s public debt should not exceed 60% of GDP, from 52.4% at the end of 2019 and that more details about the aid would be announced on Tuesday.

To aid recovery, local banks are expected to “throw in” around €2bn in a fund for which the state would secure an additional €1.25bn in guarantees. Serbia’s development fund would add another €200m. Under the plan, Serbia will also resort to an array of measures, such as corporate bonds to boost major firms, including state-run Telekom Srbije telecom, the Elektroprivreda Srbije energy producer and Air Serbia JAT.UL flag carrier.

“We want to inject even more money into economy,” said Vucic who is also the head of the ruling Progressive Party, which faces general elections this year.

So far, 13 people in Serbia, out of a population of 7 million, have died from the coronavirus and 741 have been infected. To counter the outbreak, Serbia introduced stringent measures, including a state of emergency and an overnight lockdown for all.

More on this subject: Coronavirus

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