Minister of Economy and Regional Development Nebojsa Ciric stated that the government will advise business banks to start allowing loan reprogramming to companies in Serbia in order to reduce the illiquidity of economy.

At a press conference following a government session, Ciric stressed that banks are recommended to grant a one year grace period to companies and extend their repayment period for another year, explaining that during the grace period companies will only be under obligation to pay the interest rate.

The idea behind this recommendation is to indirectly stimulate production in Serbia and reduce unemployment.

This decision will enable companies to use a significant portion of their funds as their working capital, instead of paying back the loans, the Minister explained.

Ciric stated that the decision was made in consultation with the National Bank of Serbia, which will decide on a different classification of banking investments in order to reduce banks’ allocations for obligatory reserves in case of loan reprogramming.

Head of the Office of Media Relations Milivoje Mihajlovic said that the government today adopted a Bill amending the Law on income tax.

The document proposes relief from taxation of income from agriculture and forestry in 2012, he observed, adding that this measure will help to increase investment in agriculture.

He affirmed that the government decided to allow Milorad Veljovic to remain chief of police until the procedure to appoint a new chief is completed in line with the Law on police.