On the basis of Article 7. of the Decision on Establishing the Development Fund of AP Vojvodina (Official Gazette 4/2002) and Article 17. of the Statute of the Development Fund of the Autonomous Province of Vojvodina, the Management Committee of the Fund , at the session held on ___________ 2005, adopted

PROGRAMME

OF THE DEVELOPMENT FUND OF THE AUTONOMOUS PROVINCE OF VOJVODINA  FOR 2005

BASIC OBJECTIVES

The Development Fund of the Autonomous Province of Vojvodina (herein after: the Fund) shall focus its activities in 2005, on long-term and short-term crediting of profitable programmes which shall be aimed at development of the Autonomous Province of Vojvodina.

 1. DEVELOPMENT OF AGRICULTURAL AND FOOD-PROCESSING INDUSTRY

 Credit resources for development of agriculture and food-processing industry, shall be granted to legal and natural persons (owners of farmlands) for following purposes:

-         restoration of agricultural mechanisation

-         forming  and renewing foundation herd and improving organisation in the area of cattle breeding

-         forming and renewing perennial plantations (orchards and vineyards)

-         capacity building and modernisation of processing lines for primary agricultural products

-         procurement of equipment for protected area

-         realisation of programmes for health food production

-         procurement of intermediate goods for undisturbed operation of process of primary agricultural production

with the purpose of

-         increase of the level  of technical equipment

-         changing the seeding structure to the benefit of more competative crops on the market

-         higher level of specialisation and finalisation of production

-         higher level of capacity utilisation

-         returning to profitable business activities

-         increase of export.

2. DEVELOPMENT OF  SMALL AND MEDIUM-SIZED ENTERPRISES

Credit resources for development of small and medium-sized enterprises shall be granted to legal persons for following purposes:

-         raising the level of technical –technological equipment

-         encouraging development of new technology

-         transfer of know-hows and commercial patents-inovations

-         encouraging development of sectors and fields which have impact on change of economic structure

-         encouraging utilisation of comparative advantages of the area of the Autonomous Province of Vojvodina

and functioning as:

-         increase of employment

-         improvement of balance of payments positions through increase of export and substitution of import;

-         increase of level of innovativeness

-         introduction of management system of quality

-         organisational, technological and ownership restructuring

-         energy efficiency and finding alternative forms

-         environmental protection

-         finding possibilities for utilisation of secondary raw material as future raw material potential

3. INCENTIVES FOR ESTABLISHING AND DEVELOPMENT OF ENTREPRENEURSHIP

Credit resources as incentives for establishing and development of entrepreneurship shall be granted to natural persons for:

-         expending activities of independent handicraft and services shops

-         providing initial resources for commencement of entrepreneurship

-         creating institutional conditions for entrepreneurship development.

4. INCENTIVES FOR BALANCED REGIONAL DEVELOPMENT

Development of underdeveloped areas and ehtnically mixed areas, on the territory of the Autonomous Province of Vojvodina, shall be performed by means of crediting of start-up businesses and development of small and medium-sized enterprises and entrepreneurship.

TERMS FOR USING CREDITS

The Fund credits are granted through tenders for:

-         long-term crediting of development programmes

-         long-term crediting of start-up programmes

-         short-term crediting of export programmes

-         short-term crediting of procurement of intermediate goods in agriculture.

Legal and natural persons,from the territory of the Autonomous Province of Vojvodina, are eligible for utilisation  of  resources of the Fund

Beneficiaries of the investment credits of the Fund have to ensure at least 40% of the estimate value of the subject of crediting. Previous investments within the project, which is a subject of crediting, can also be considered as personal share.

The Fund credits can not be used for financing construction of facilities.

Instruments for ensuring credit repayment:

-         commercial banks guarantees

-         bill surety from the commercial bank

-         trust deed of the first class on the real estates of the credit applicant at the amount twice higher than the credit value

-         trust deed on the subject of crediting

-         joint and several guarantee

The Management Committee of the Fund shall decide on models of instruments for ensuring credit repayment , during the period when tenders are invited.

Credit resources shall be granted for the period from three to five years for the long-term placing, that is, up to one year for the short-term placing.

Interest rate shall be calculated annually, and it shall be determined by the Management Committee, depending on the type of placing and conditions on the market of capital.

Grace period for repayment of investment credits shall be 12 months, except for credits for financing perennial plantations, when it shall be 24 months. During the grace period for repayment , the intercalary interest shall be calculated.

During the estimation of the credit amount, a currency clause shall be applied.

Annuities shall be calculated and paid quarterly, apart from credits for start-up business where calculation and payment are done monthly.

CRITERIA FOR PROGRAMME EVALUATION

Credit worthiness of the investor

- profit stability

- operational stability

- financial stability

- indicators of solvency

- indicators of efficiency

- net working fund

- cash circulation

-indicators of indeptedness

- indicators of regular servicing of credit debts.

After determining the credit worthiness, the project evaluation is done, on the basis of following elements:

1. Economic project evaluation:

-         project solvency

-         general rate of income

-         net current value

-         internal rate of profitability

-         period of repayment of invested capital

2. Level of investment per position

3. Level of development of municipality

Citeria for determining level of underdevelopment of municipality is a budget income per capita- 3000 dinars in 2004.

UNDER THE SAME CONDITIONS, PRIORITIES FOR GRANTING CREDITS SHALL BE GIVEN TO PROGRAMMES BY WHICH IMPLEMENTATION, HIGHER NET FOREIGN-CURRENCY EFFECT IS ACHIEVED; PROGRAMMES WHICH FACILITATE MORE EMPLOYMENT AND PROGRAMMES FROM THE UNDERDEVELOPED AREAS.

RESOURCES

For purpose of achieving the set objectives, required resources shall be provided from the Budget of the Autonomous Province of Vojvodina, from profits made in the process of privatisation of economic entities from the territory of the Autonomous Province of Vojvodina, by means of payments of annuities upon received long-term and short-term placing and other resources.

Expected inflow of resources in 2005:

1. Incomes from the Budget of APV- privatisation incomes                    1.000.000.000

2. Inflow from annuities after received long-term credits             587.111.760

3. Inflow from annuities after received short-term credits                        163.013.553

                        TOTAL:                                                                       1. 750.125.313

PROCEDURES FOR APPLICATION AND PROCESSING OF CREDIT APPLICATION

The Fund place resources through tender procedure. Tenders are invited for every type and purpose of placing.

Tender procedure is undertaken in the Fund offices which exist in every local community on the territory of the Autonomous Province of Vojvodina.

Credit applicants apply for appropriation on the APPLICATION FORM FOR CREDIT GRANT. With the application form, applicant should present all necessary documentation, defined by terms of tender, as well as the business plan, designed on the basis of METHODOLOGY FOR DESIGN OF BUSINESS PLANS, determined by the Fund.

FINAL PROPOSALS

This programme shall be applied from 1st January 2005 and it shall be published in the «Official Gazette of AP Vojvodina»

PRESIDENT

of the Management Committee