April 23, 2020 / 9:52 AM / a month ago

UPDATE 1-Serbia prepares to recast budget, eyes 7% deficit, up from 0.3%

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BELGRADE, April 23 (Reuters) - The Serbian government will rework its budget to compensate for economic damage caused by the coronavirus pandemic, increasing its deficit to 7% from a previously planned 0.3%, President Aleksandar Vucic said on Thursday.

Like governments across Europe, Serbia introduced an array of measures last month to curb the spread of the coronavirus. Those measures virtually halted most small-business activity and reduced outputs of major companies.

To speed up recovery after the pandemic, the government in Belgrade introduced a 5.1 billion-euro ($5.6 billion) support programme last month for small businesses, including bank guarantees worth 2 billion euros for cheap loans.

The government will debate the new provisions of the spending plan for 2020 on Friday, Vucic told reporters in Belgrade.

“Tomorrow we will come up with the proposal for the government for the recast of the budget. W will try to make sure that the deficit does not exceed 7%,” he said.

The International Monetary Fund and the World Bank expect Serbia’s economy to miss its 4% growth target for 2020 and to go into recession, then rebound in 2021.

Serbia, which is a candidate to join the European Union, had no need for additional funds from the EU and IMF, Vucic said, adding that it had already borrowed under more favourable conditions.

On Monday the Serbian government allowed some small businesses and markets to re-open in a cautious easing of a nationwide lockdown, following signs of a decline in the rate of coronavirus infections.

Serbia may restart some commercial air lines and cross-border passenger transport and allow more businesses to reopen in the first week of May, Vucic said.

$1 = 0.9271 euros Reporting by Aleksandar Vasovic; editing by Alison Williams, Larry King

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