IMF urges transparency on Air Serbia’s coronavirus aid

The Serbian government is preparing a state aid package for its national airline in order to minimize the effects that the coronavirus pandemic has had on the airline. Last week, the state informed the International Monetary Fund (IMF) mission in Serbia of its plans to help the company, noting that it was currently the only state-owned company to receive aid. Commenting on the plans, which have yet to be fully disclosed to the public, the IMF said: “The authorities agreed that close monitoring of revenue and expenditure risks will be critical going forward. At this stage, only Air Serbia had been identified as needing government support. The mission stresses that state support for troubled state companies, including Air Serbia, must be offered in a transparent manner. He suggests using the Fund’s technical assistance to help monitor possible losses on bank loans backed by state guarantees.”

The Serbian government had previously said it would provide extensive support to its national airline. Finance Minister Siniša Mali noted that the government would help Air Serbia with the repayment of two loans, valued at US$52.9 million and US$63 million, calling the airline in the national interest. The company will see the first of the two loans mature this month. Mali said: “We are negotiating with the creditors. Although I cannot reveal the content of those conversations, I can say that we will certainly help Air Serbia. We are working to resolve this issue together with our partners at Etihad Airways.”

The Ministry of Construction, Transport and Infrastructure has developed four strategies to financially help the country’s national airline. According to the ministry, the country will provide direct fiscal support as its main mode of assistance. The amount will depend on the final financial consequences of Covid-19. He said it was difficult to approximate an exact amount that the state would invest in the national airline, but noted that the assistance would be continuous and in line with the government’s priorities, needs and possibilities. Mr. Mali said that a joint business plan has been drawn up with the airline’s management, adding that the current situation in the global air transport sector could be used to procure another aircraft for the company.

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