Serbia Reschedules Payments to Fiat for Local Plant

Serbia has reached an agreement with Fiat, which will see the cash-strapped Balkan country reschedule payments to the Italian carmaker for their joint car plant venture in the city of Kragujevac.

Serbia will now pay €50m of the €90m it owes Fiat this year once it has revised the 2012 budget next month, with the balance to be paid in 2013.

“The problem is that the previous government failed to include payments to Fiat in the 2012 budget and now we will pay a part and reschedule the remaining €40m to 2013,” a government spokesperson said on 30 August. He added that Fiat’s chief executive officer (CEO), Sergio Marchionne, is expected to visit Serbia next week for further talks.

A new, Socialist-led coalition government took power in Serbia in July, inheriting a budget deficit of 7% of output and public debt of 54.7%. Serbia owns 33% of a €1bn joint venture with Fiat to produce the Fiat 500l compact in Kragujevac. The first cars were produced in July and the plant is expected to employ 2,400 workers and produce up to 200,000 cars annually.

The government also pledged to complete construction of a four-lane road linking Kragujevac in 2012 and the nearby E75 pan-European highway. Rising costs and budget constraints have slowed the project. “We will complete construction of the few remaining kilometres soon and we will do everything possible to make sure that the delay has no impact on production,” the government spokesperson said.

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