Serbia To Raise Bank Deposit Guarantee to 50,000 Euro, To Scrap Capital Gains Tax - PM Cvetkovic

“The government will launch these measures in an effort to reduce risk and increase security,” Cvetkovic told a news conference.

If needed, the government will also incorporate a special fund for emergency interventions in the country's banking sector within its own 2009 budget, he added.

These measures of EU-aspiring Serbia come on the heels of the decision by finance ministers of the European Union last Tuesday to raise the minimum bank deposit guarantee to 50,000 euro. So far, EU member states have applied various limits for the guarantees they offer to depositors in their banks.

The Serbian government will consider raising the deposit guarantee firther to 100,000 euro if need arises, Cvetkovic said.

It will propose that no capital gains tax was levied on private savings deposits until the end of 2009 and on capital gains from other business deals - until the end of 2012.

To finance those economy-boosting measures the government plans to raise excise duties on fuels and cigarettes next year, he added.

Last week, Serbia’s central bank scrapped its mandatory reserves requirement for banks' fresh borrowing in foreign currency retroactively from October 1, aiming to boost the liquidity of the country's banking system amid the global financial crisis. The c-bank also said it increased to 20% from 10% the share of mandatory reserves on foreign currency deposits, which banks have to maintain in Serbian dinars in a bid to stimulate demand for local currency.

On Monday, the Serbian dinar currency strengthened against the euro on the back of the changes in the central bank’s reserves requirements.

($ = 0.7453 euro)