ECONOMY

In Brief

Serb central bank holds key rate at 12 percent BELGRADE (Reuters) – Serbia could lower its interest rates but only after the government decides on its 2010 budget, a key factor as the International Monetary Fund (IMF) ponders releasing the next stages of a 3-billion-euro loan, the central bank said yesterday. The central bank held its key policy rate at 12 percent, disappointing analysts who expected a cut to boost the economy, badly hit by the worldwide recession despite its relative isolation. «Only after we see elements of the 2010 economic policy could we cut more,» central banker Radovan Jelasic said. Serbia’s gross domestic product (GDP) will shrink 3.6 percent in 2009, a number just a notch below a July forecast of minus 3.5 percent for the Balkan country, Jelasic said. The IMF, in a visit that ended earlier this week, forecast Serbia will recover in 2010 with GDP growth of 1.5 percent, after a contraction of 4 percent in 2009. Jelasic said the second-quarter contraction was 4.4 percent. The central bank last cut its repo rate on July 10 by a full percentage point to 12 percent. Turkish lending sector profits up 35 pct ISTANBUL (Reuters) – Profits across the Turkish banking sector rose 35 percent in the first seven months of the year to 12.7 billion lira ($8.44 billion), broadcaster CNBCe reported yesterday, citing the banking watchdog. The closely watched sector posted strong earnings in the second quarter as banks kept lending rates high through an aggressive cycle of 900 basis points of interest rate cuts by the central bank since November. The capital adequacy ratio for the sector was 19.8 percent at the end of July, the broadcaster said. The banking watchdog could not immediately confirm the data. Turkish banks, which make up more than half the Istanbul Stock Exchange in terms of market value, have on average more than doubled their share price since the index hit its lowest point in March. Turk lenders have not been exposed to the same level of toxic assets as many of their Western peers. Montenegro-A2A Montenegro’s government and Italy’s A2A have signed a contract giving the Italian company control of a minority stake in power monopoly Elektroprivreda Crne Gore (EPCG). «This contract means a lot to Montenegro, which will become energy hub between Western Europe and the Balkans,» Montenegro’s Deputy Prime Minister Vujica Lazovic told reporters after the signing. The contract will enable the Italian company to get control of a more than 40 percent stake in state-owned EPCG. A2A had won a tender to buy a 18.3 percent stake, beating a higher bid from Greece’s Public Power Corporation. (Reuters) Turk volatility Turkey’s central bank yesterday said it sees limited volatility in annual inflation until mid-2010 due to the base effect, despite expectations that inflation will remain at lower levels. A price hike for wholesale electricity starting in October will have an important effect on inflation, the bank said following August data that showed consumer prices fell 0.30 percent month-on-month in August and the producer price index rose 0.42 percent month-on-month. (Reuters)