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Serbia will get $200 mn in a loan from Moscow to fill in part of the hole in its budget, the press service of the Serbian government has announced. According to the agreement, signed on Wednesday in Moscow between the Serbian minister of finance Diana Dragutinovich and the Russian deputy minister of finance Dimitry Pankin, Serbia will pay off the loan by 2021 but by March 2012 Belgrade will be free of payments.

In May it is expected both countries to sign an agreement for another loan, aimed at financing large infrastructural projects in Serbia. The signing of both agreements is the result of the blessings of the presidents of Serbia and Russia - Boris Tadich and Dmitry Medvedev who agreed about this in March last year.

The logical question now is how big the hole in the Serbian budget is, since it comes necessary for Russia to pour money to fill it in. And the answer is not that simple and depends on who is calculating what is going on in the Serbian Treasury. According to the consolidated data, Serbia's budgetary deficit has increased last year to 121 bn dinars (around 1.2 bn euro), compared to 2008 when the deficit was 70.4 bn dinars. The hole in the budget has existed since 2006 and is constantly growing. The expectations are that it will continue to grow and from 4% of GDP it will increase to 4.5%.

Of course, the state is trying to compensate the lack of money in the Treasury the way it can. A Russian loan is only a part of these efforts and we will elaborate a bit more on why this decision is so important. Before that we have to remind the state's intention to take loans worth 160 mn euro from three commercial banks, as well as giving guarantees worth 170 mn euro to a loan for the state gas monopolist Serbiagaz. This was reported last month by the minister of finance Diana Dragutinovich, thus angering the Liberal Democratic Party.

According to the liberal democrats, this is a pure conflict of interest because the socialist Member of Parliament Dushan Bayatovich is a director of Serbiagaz and his colleague Alexander Vlahovich - a member of the Executive Board of one of these three banks. In the meantime, only a few days ago the IMF announced that Serbia is fit to get the third tranche of 360 mn euro under the stand-by agreement with the Fund, worth 3 bn euro. And the government in Belgrade for now has signaled readiness to use only half of the money.

The 2-year agreement with the IMF has been signed in March last year and envisages Serbia to reduce its public spending in order to reduce the budgetary deficit. The numbers speak for themselves whether the government and the Ministry of Finance have succeeded with 1 bn euro, absorbed so far for the purpose.

This is how we reach the issue of the Russian loan which, whether by accident or on purpose, comes in a moment when Serbia is expecting to receive the first quantities of Russian gas for the Banatksi dvor (Banat yard) gas depository . Currently the technical procedure for the establishment of a joint venture between Gazprom and Serbiagaz is being completed and on May 12 is expected the first quantities of gas to start flowing toward Serbia.

As euinside wrote it is this gas depository that Bulgaria is expecting to receive gas from when the two countries connect their gas systems. The intentions for the construction of this gas pipeline have been confirmed in an official document last month but a week ago the director of Serbiagaz Dushan Bayatovich said in an interview for the Vecernje Novosti newspaper that "this project is not a priority but is important for the energy security" and that the issue was not whether Serbia wanted to build it or not but whether the European Commission had the same attitude toward Serbia as it had toward Bulgaria. Bulgaria already received its share of the money for the project while the funding for the Serbian part is still not negotiated.

The same newspaper claims by the way that the measures of the Bulgarian government against the crisis are extremely unexpected, given the stability of the Bulgarian economy which was only "scratched" by the crisis.