ECONOMY

In Brief

Serbia signs deal to upgrade natural gas storage facility Srbijagas, Serbia’s natural gas distributor, signed a contract with Austria’s Heat group to upgrade the Balkan country’s largest storage facility as it seeks to ensure supplies after disruptions in January. The underground storage in the northern town of Banatski Dvor will have a daily output capacity of as much as 5 million cubic meters of gas after modernization, Chief Executive Officer Dusan Bajatovic said. Serbia had to rely on gas supplies from Austria, Germany and Hungary during a January dispute between Russia and Ukraine that halted exports from Russia for almost two weeks. Work under the 5.5 million-euro ($7.2 million) storage contract should begin on April 13, Bajatovic said. «We should have a new storage that will be a safeguard in the event of another gas crisis,» Bajatovic said. Srbijagas and the export unit of OAO Gazprom, Russia’s state-run gas producer, plan to sign an accord this month on setting up a joint venture to oversee construction of the South Stream pipeline in Serbia, Bajatovic said. «Talks are under way in Moscow on the terms of the future joint venture,» the chief executive said. Russia, which supplies a quarter of Europe’s gas, is seeking new routes to Europe after the price dispute with Ukraine. (Bloomberg) Romania revises budget, slashes spending BUCHAREST (Reuters) – Romania’s government revised the 2009 budget on Saturday, keeping investment plans intact while slashing spending to meet the demands of a 20-billion-euro ($26.6 billion) IMF-led aid package for its economy. The country of 22 million people on the EU’s eastern frontier is the third member of the bloc to be bailed out after Hungary and Latvia, as world financial turmoil wipes out sources of funding for an economy heavily reliant on foreign cash. «Our main goal is to limit the negative effects of the economic crisis. Our goal is to back the relaunch of the economy, relaunch borrowing and save existing jobs,» Prime Minister Emil Boc told reporters. Under Saturday’s revision of the budget bill, which forecasts economic contraction of 4 percent in 2009, the budget deficit target was set at 5.1 percent of gross domestic product, barely below last year’s levels, but leaving scope for public spending to bolster the economy. Romania had originally planned a budget deficit target of 2 percent of GDP and 2.5 percent economic growth for this year. As the global crisis engulfs Europe, Romania has turned from being the EU’s fastest-growing economy to one of its most fragile, as private debt in foreign currencies and a growing budget deficit have exacerbated deep external imbalances. Over several months, Romania has moved from being an attractive destination for foreign investment, as manufacturers poured in to benefit from fast rates of growth, to an economy plagued by ballooning debt and sour market sentiment. Thousands of workers have been laid off and several major factories have announced work stoppages in recent months. Finance Minister Gheorghe Pogea said the planned cuts would involve the budgets of ministries and state agencies earmarked mainly for goods and services acquisitions. A 20-percent chunk of planned spending that was earmarked for investment would be maintained, he said.