May 20 (Bloomberg) -- Rainfall in Serbia abated, helping emergency workers begin the muddy cleanup from deadly floods that inundated whole towns and farms and prompted the country to seek worldwide aid in food, medicine and building materials.
Kristalina Georgieva, the European commissioner for humanitarian aid, arrives in Belgrade today to discuss post-disaster assistance and help prepare a request for aid of as much as 1 billion euros ($1.4 billion) a year, Michael Davenport, the head of the EU delegation to Serbia, said in an interview with state TV broadcaster RTS. Serbia started European Union accession talks on Jan. 21.
“The situation is under control” and the state of emergency will be lifted by week’s end, Premier Minister Aleksandar Vucic said. “We have a large number of victims and it will be even greater when the waters retreat.”
Serbia declared a state of emergency on May 15 after the worst rainfall since records began to be kept 127 years ago triggered floods leaving 19 dead in the largest former Yugoslav republic, 17 in neighboring Bosnia and two in Croatia. In Serbia alone, more than 30,000 people have been evacuated, the Interior Ministry said today. The government declared a three-day mourning through May 23 for the flood victims.
The yield on Serbia’s 10-year Eurobond, maturing in 2021, rose one basis point, or 0.01 percentage point, to 4.942 percent by 4:05 p.m. in Belgrade, after a 10 basis-point increase yesterday, data compiled by Bloomberg show. The dinar traded mostly unchanged at 115.69 per euro.
The London-based European Bank for Reconstruction and Development is “working on a support package in coordination with other” international financial institutions as the damage from the flooding may be substantial, the EBRD said, citing bank President Suma Chakrabarti in an e-mail, ahead of his three-day visit to Serbia. The damage to roads and other infrastructure “will cause major problems for the free movement of goods and people” and will likely hurt small businesses in the region disproportionately.
“Despite incoming aid, the impact of the flooding on Serbia’s fundamentals risks being considerable,” UniCredit economist Carlos Ortiz said in a note to clients. The floods will affect growth, raise prices and put at risk planned fiscal restraint making “the signing of an IMF deal by” the third quarter “of utmost significance.”
Serbia planned to save about 400 million euros ($548 million) this year through public wage cuts, delayed retirement for women, a crackdown on the gray economy and incentives to investors as it seeks to narrow Europe’s highest fiscal deficit of more than 7 percent of gross domestic product to qualify for an International Monetary Fund loan.
The Sava and Danube rivers are expected to rise beyond defense levels in Belgrade this week, according to the Hydrometeorological Service. The Belgrade authorities and weather forecasters don’t expect the Sava to flood Belgrade, where volunteers piled up sandbags to protect the city.
The “Extra tropical Storm Yvette” also called “Tamara” in the local media, affected isolated regions in Romania, Slovakia and Croatia, Aon Benfield Inc., a reinsurance broker and unit of Aon Plc, said in a report today.
“Given a fairly low level of residential flood insurance penetration in the Balkans, insured losses are generally expected to be negligible,” it said.
The Agriculture Ministry warned people from affected areas not to consume the food they grew in flooded fields, and the Public Health Institute urged mothers to breastfeed their babies. The army called on volunteers to help clean and disinfect the affected homes and fields.
“I expect a lot of help from foreign governments, we need a lot of medicine, food, especially baby food and construction materials,” Vucic said during a visit to Obrenovac yesterday, according to RTS. The damage can reach “hundreds of millions of euros if not a billion euros.”
The World Bank will help the government assess the damage in infrastructure and energy and help plan the imports of cement, fuel, construction materials and water-treating chemicals, resident representative Tony Verheijen told RTS broadcaster in an interview today. Some World Bank loans planned for Serbia may be redirected toward post-catastrophe financing.
Foreign workers from France, the Czech Republic and Germany have been deployed to protect Serbia’s two biggest power plants that generate half of its electricity output, preventing as much as 600 million euros in damage, “which Serbia could not afford,” Vucic said.
Russia, Poland, the Czech Republic, Slovenia, Austria, France, Hungary, Croatia, Montenegro, Bulgaria, Italy, the three Baltic states, Norway, Turkey and Azerbaijan are among countries offering assistance, which includes helicopters, water pumps, boats, rescue workers, detergents and water-purification equipment.
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