BELGRADE (Reuters) – Serbia said yesterday it hoped to win a generous write-down on its $130 million debt to the International Finance Corporation (IFC) by mid-July and let the body swap the remaining debt into equity in five Serbian banks. The announcement came hours after the International Monetary Fund approved the government’s economic policy and decided to release a new $147 million loan tranche to the nation – the first since late July 2003. «After the IMF decision, we can speed up talks with the IFC and hopefully reach an agreement by mid-July. Our debt to the IFC is around $130 million and it is held by five Serbian banks,» Finance Minister Mladjan Dinkic told a news conference. «We expect to get a bigger forgiveness on that debt than the 66 percent approved by the Paris Club of creditors,» Dinkic said. Once the part of the debt was forgiven, the remaining sum will not be repaid in cash but the IFC, the World Bank’s private sector arm, will swap it into equity in the banks Vojvodjanska, Panonska, Continental, Novosadska and Privredna Banka Pancevo. Serbia’s biggest and most troubled bank Vojvodjanska, with the biggest share in the debt to the IFC, could get 80 percent forgiveness, but the percentages will vary from bank to bank, Jelasic said. In November 2001 the Paris Club of sovereign creditors granted Belgrade a 66 percent write-down on its $4.5 billion debt, 51 percent immediately and 15 percent on completion of its 2002-2005 IMF loan agreement. However, last week the London Club of commercial creditors rejected Serbia’s latest offer to settle a $2.4 billion debt on terms comparable to the Paris Club deal, according to Serbian sources, leaving the two sides’ positions very far apart. Serbia elects a president on June 13 and hardline candidate Tomislav Nikolic, who is not seen as keen to repay debts to Western lenders, enjoys the greatest support. Separately, Serbia expects the privatization of its fifth biggest bank, Jubanka, to be completed by the end of this year, as part of efforts to pay down debt and make banks more competitive, the central bank said yesterday. The government gave a three-week deadline to foreign banks to submit their bids when it launched on May 28 the sale of an 88 percent stake in Jubanka, the first of three banks planned to be offered for sale this year. Germany’s HVB Group, Italy’s Banca Intesa and Greece’s Bank of Piraeus SA are among interested parties, Central Bank governor Radovan Jelasic said in May. «Jubanka’s privatization will be conducted in three stages. Prospective bidders will express interest by June 19, then they will have time to conduct due diligence and finally we will negotiate with bidders individually on their price offers,» Jelasic told a news conference on Tuesday. Jubanka’s total assets stood at 217 million euros at the end of 2003, with capital reported at 116 million in May 2004.