UPDATE 1-Serbian state-backed pandemic loan demand nears 1 billion euros

(Adds details about additional lending by European Bank for Reconstruction and Development)

BELGRADE, June 24 (Reuters) - Demand for state-guaranteed loans to help Serbian firms weather the coronavirus crisis has reached almost 1 billion euros ($1.13 billion), Finance Minister Sinisa Mali said on Wednesday.

In April, the government approved bank guarantees worth 2 billion euros for cheap loans as part of a wider 5.1 billion euro pandemic package.

So far, banks have approved 6,322 three-year loans with a grace period of between nine and 12 months, while the total value of approved loans is 526 million euros, Mali said.

“They are working on approving requests for another 3,449 loans with a total value of 453 million euros,” he added.

Also on Wednesday, the European Bank for Reconstruction and Development (EBRD) said it had scaled up its financing for banks in Serbia, a European Union membership candidate, by providing 210 million euros to support small and medium-sized enterprises.

“Greater access to finance is a lifeline for many small businesses in Serbia as they face a drop in sales and cash-flow, and experience supply chain disruption,” Zsuzsanna Hargitai, EBRD regional director, said in a statement.

Loans are available via Serbian subsidiaries of Banca Intesa, Erste Bank, Eurobank, ProCredit Bank and UniCredit Bank, the statement said.

To help mitigate the economic impact of the coronavirus, the EBRD expects to deliver up to 800 million euros of new financing to the Serbian economy in 2020.

The International Monetary Fund and the World Bank have both forecast that Serbia’s economy will miss its 4% growth target for 2020 and suffer a recession, but rebound in 2021.

The recovery programme will lead to an increase in the deficit this year of up to 7% of economic output that will be covered from financial reserves and borrowing. The budget shortfall was originally forecast at 0.3% of economic output.

The coronavirus has killed 263 people out of 13,092 confirmed cases in Serbia, which has a population of 7.2 million. ($1 = 0.8854 euros) (Reporting by Aleksandar Vasovic; Editing by Kevin Liffey)