BELGRADE (Reuters) – Serbia faces trouble if its private sector debt continues growing fast, leading the financing gap to top $6.0 billion by 2015, economists from an influential think-tank said yesterday. Experts from Serbia’s Economics Institute said the country needed to attract more foreign investment, slow down its borrowing and cut overall public spending, while also containing private sector borrowing, which hit $1.5 billion in 2004. «After a set of restrictive central bank measures, we hoped private sector borrowing would fall in 2005, but instead it rose to $2.0 billion,» Stojan Stamenkovic, chief macroeconomist at the institute, told a Belgrade economics forum. With a five-year average maturity, private sector debt accounted for 50 percent of investments on average. Stamenkovic said the government had to keep lowering the current account deficit and trade gap, woo at least $2.5 billion in foreign direct investment a year and even take on new debt to secure funds to finance the deficits. «But even then, if the current private sector borrowing growth continues, our financing gap by 2015 will reach 6 to 7 billion dollars,» he said. Stamenkovic called for drastic cuts in public spending, by more than the 1.3 percent the government has planned in 2006. «If private sector demand grows by 2.5 percent a year and private spending by 4 percent, then the government must cut public spending by 3-4 percent a year,» he said. «This is politically difficult to do and that is the problem between monetary and fiscal authorities in Serbia,» he added. Economist Jurij Bajec appealed for measures to secure steady growth, cut inflation, upgrade infrastructure and boost exports. Forecasts of over 6.0 percent growth for 2005 were good news, but inflation of 17.7 percent spelt trouble. «We need macroeconomic stability, average growth rates of 5 to 7 percent, inflation below 5 percent and investment to GDP ratio of at least 25 percent. At least one-third of these investments needs to be foreign,» Bajec said. He added that the structure of the economy had improved, the services sector now accounting for 56 percent of GDP, led by a boom in trade, financial mediation and real estate. Agriculture accounted for 16 percent and industries for 25 percent.