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Serbia Triples Lending Subsidies for Liquidity-Stricken Firms

Serbia more than tripled subsidies to more than 1 billion dinars ($11.7 million) to encourage banks to lend to companies facing liquidity problems amid the Balkan nation’s second recession in three years.

“Considering the great demand in the market, subsidies have been raised through the rest of the year,” Finance Minister Mladjan Dinkic told reporters in Belgrade today.

The initial subsidy amount of 300 million dinars resulted in 353 million euros ($457.5 million) in new lending activity, triggering a rally in the dinar, according to the ministry.

The dinar gained 1.39 percent today rising to an intraday high of 110.3866 at 12:28 p.m. in Belgrade, its highest level in seven months, prompting the Belgrade-based Narodna Banka Srbije central bank to start buying euros at just below 111 to the euro, to slow its rally.

The dinar has gained 4 percent against the euro since the start of October, making it the world’s top performer this month so far.

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

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