YU eyes fresh credits from China

BELGRADE, Aug 2, 2000 -- (Reuters) China has agreed to extend new credit to Yugoslavia's cash-strapped government, a senior official was quoted as saying on Tuesday.

"China is prepared to grant Yugoslavia a new credit because they are satisfied with the degree of financial cooperation related to the previous $200 million credit," Glas Javnosti newspaper quoted Yugoslav federal minister Borka Vucic as saying.

The government said last December that China had decided to give Yugoslavia a $300 million credit to help finance the reconstruction of the economy, which was severely damaged by NATO's 11-week bombing campaign in mid-1999.

Tuesday's report was the first time a government minister has given the figure as $200 million. Belgrade has released no details of the funds or what China may have got from any agreement, saying only that the two countries are cooperating in the telecommunications field.

China, a fierce opponent of the NATO air strikes and whose embassy in Belgrade was hit during the bombing, confirmed at the time it was helping Yugoslavia but declined to elaborate.

Independent economists estimated last week that year-on-year inflation had hit 100 percent by June and expected prices to rise further.

Vucic's job is to oversee relations between Yugoslavia and international financial institutions, although these were cut in 1992 over the government's role in the conflict in neighboring Bosnia.

Vucic, frequently dubbed "Milosevic's private banker", said although Western financial sanctions were expected to last for the foreseeable future, Arab countries were interested in doing business with Yugoslavia.

"One Arab institution recently invited our representatives, who presented 21 development programs before delegations from 70 countries," she was quoted as saying.

The European Union imposed sanctions on Yugoslavia in May 1998 over Belgrade's repression of ethnic Albanians in Kosovo.

The sanctions ban investments, credits and crude oil sales to Serbia. The EU and the United States have said Yugoslavia will get foreign credits once Milosevic is replaced by a democratic government.

Original article