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Last Updated: Monday, 21 July, 2003, 16:32 GMT 17:32 UK
Serbia seeks new top banker
Former central bank chief Mladjan Dinkic holds up what he claims is evidence of government corruption
Mr Dinkic accused government officials of corruption
Serbia tried on Monday to cap a row that has rocked the control room of the country's economy by suggesting a government loyalist as new central bank chief.

The choice by parliament's finance committee of Kori Udovicki, currently the energy minister, as the new head of the National Bank of Serbia follows the sacking of previous incumbent Mladjan Dinkic last week.

Mr Dinkic - an active opposition party member - had protested against a new law passed on Friday, designed ostensibly to make the head of the central bank apolitical.

He claimed the law had been designed to get rid of him, not least because he and others were accusing senior government advisers of involvement in an international money laundering scandal.

Accusations all round

On Thursday, he had produced documents he alleged were Hungarian police requests asking for details of million-dollar transfers by two officials.

Both men have denied the charges.

Zoran Zivkovic
Prime Minister Zoran Zivkovic says Mr Dinkic abused his position

Mr Dinkic's team followed him out of the door, announcing their own resignations within minutes.

But government officials say Mr Dinkic was using his position to advance his G17 Plus party, which has no seats in parliament but is gaining popularity.

Mr Dinkic became central bank governor three years ago shortly after the downfall of Balkan strongman Slobodan Milosevic.

Since then, he has generally been seen as a firm hand on the tiller, stabilising the dinar's exchange rate and expanding foreign currency reserves after the economic meltdown that accompanied the fighting throughout the former Yugoslavia during the 1990s.

But the government of Prime Minister Zoran Zivkovic has insisted that his policy has been too tight, pointing to contracting output from the farming and industrial sectors.

It has denied that the new law, and the new central bank governor, are its ticket to printing money so as to boost growth - although Mr Zivkovic has suggested that the dinar could slip in value under a new European Union loan agreement.

And Ms Udovicki insisted that no such action would be permitted under her tenure.

"If I am appointed the governor, I will ask the Prime Minister not to deal with exchange rate policy," she told reporters.

"The way things are right now, I do not expect any serious change in the dinar exchange rate in the near future."

Her previous experience at the International Monetary Fund, she said, could help with the government's negotiations over loans.


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