Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic stated at yesterday’s session that the government adopted a programme for encouraging balanced regional development in 2010, worth €100 million.

Dinkic explained at a press conference that this programme will boost employment and help revive production in the poorest municipalities of Serbia. He specified that €70 million will be used for starting production in the 40 most underdeveloped municipalities, specifically those with a development level of less than 50% of the average growth rate in Serbia.

The best way for the realisation of this programme is for strategic partners to propose to the Ministry of Economy investment plans for firms in these underdeveloped municipalities.

He explained that strategic partners will have an opportunity to obtain investment loans of between €2 million and €8 million, with a two percent annual interest rate, and with a repayment period of up to eight years.

The Deputy Prime Minister set as a good example the cooperation between the furniture maker Simpo and the Forestry and Industrial Complex (SIK) Kopaonik from Kursumlija, where workers will receive their first salary on 8 March after starting production.

Dinkic said that companies that have already shown interest in investing as part of this programme are ABS Holding which will invest in Mali Zvornik and an Italian company interested in investing in Zitoradja.

As part of the programme, funds of €20 million will be used to provide loans for encouraging investment in the production of garments and footwear, the wood processing industry and the machine, car and electronics industries. Investment will be made in 105 municipalities which are below the average development level in Serbia, said Dinkic.

Investment in existing businesses, modernisation or the opening of new companies will be encouraged. The Ministry’s website will provide all necessary information about investing in undeveloped municipalities to investors, he said.

Under this programme a sum of €10 million will be provided for issuing loans to Small and Medium-Sized Enterprises in undeveloped municipalities, said the Deputy Prime Minister.

A condition for the approval of loans, which will be issued through the Development Fund, will be a market feasibility of the investment and the utilization of loans will be monitored by the Tax Administration, Dinkic said.

The Ministry is preparing a programme for increasing the purchasing power of people, as low purchasing power is the biggest problem in Serbia currently, which is slowing down economic recovery, he said.

This is why it is extremely important that we create a mechanism, through banks, to help increase the public’s purchasing power, said Dinkic.

Decreased demand is one of the main reasons for the falling value of the Dinar. In January commerce fell by 8% and the building industry by 12%, however, industrial production went up by 3.7%, Dinkic said.