BELGRADE, Jan 30 (Reuters) - Serbia needs 7.5 billion euros ($9.64 billion) in foreign capital inflows this year to finance its current account gap and repay maturing debts, the central bank governor said in an opinion piece to be published on Saturday.
"Serbia will need 1.7 billion euros in foreign direct investments and 3.9 billion euros in new net borrowing in 2009 to finance the current account deficit planned at 16.1 percent of GDP," governor Radovan Jelasic said in an opinion piece for the weekend edition of the Belgrade daily Danas.
"Considering that 3.6 billion euros worth of debts mature in 2009, Serbia needs to borrow 7.5 billion euros to finance its excessive spending," Jelasic said in the article made available to Reuters.
The central bank will have to spend any amount which the country fails to attract from abroad, he said. Official hard currency reserves stood at 8.1 billion euros earlier this month.
Serbia's public spending at 42 percent of GDP showed that the government had to urgently restructure its spending policies and relocate funds from wages to infrastructure, he said.
"If the government fails to do it, the market will do it, finding a new balance at a new level of prices and the exchange rate," Jelasic said. "That's exactly what's happening these weeks in Serbia and the region."
Serbia's dinar
The governor also said Serbia's monetary policy was tight because the economy was heavily reliant on euros, and the high levels of the central bank's key policy rate and reserve requirements reflected the high "euroisation". (Reporting by Gordana Filipovic; Editing by Andy Bruce)