Serb State Deposits Drop in April, Central Bank Report Shows

Serbia spent 25.3 billion dinars ($282.4 million) of its foreign-currency and dinar reserves kept with the central bank in April to finance the budget before May 6 elections.

Dinar deposits fell 17.4 billion dinars to 51.8 billion dinars, a two-month low, and foreign-exchange deposits contracted 7.9 billion dinars to 70 billion dinars, the lowest level since January 2011, according to central bank data.

The government tapped the assets it holds with the Belgrade-based Narodna Banka Srbije as budget revenue shrank and spending rose, deepening the budget deficit.

The outgoing Cabinet of Premier Mirko Cvetkovic has turned to its reserves after agreeing with the International Monetary Fund to freeze a $1.3 billion precautionary loan program and leave it to the government that emerges from the May 6 parliamentary elections to renew the accord.

The government has not yet published budget figures for April. The first-quarter budget deficit was 52.7 billion dinars, compared with an IMF target of 26 billion dinars. The Washington-based lender set a 61 billion-dinar target for the end of June.

The first-quarter budget shortfall was equivalent to 6 percent of gross domestic product. Serbia’s 2012 budget targeted this year’s deficit at 4.25 percent of economic output.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net