EBRD: Flood damage to Serbia EUR 1.5-2 billion

LONDON - The devastating floods in Serbia and Bosnia and Herzegovina have already damaged their economies and will hit growth and inflation in the future as well, believes the European Bank for Reconstruction and Development (EBRD), adding that some very rough preliminary estimates put the damage in Serbia at around EUR 1.5-2 billion.

No official estimates as to the cost of this natural disaster are available as yet. However, some very rough preliminary estimates put the damage at around EUR 1.5-2 billion in Serbia, and about EUR 1.3 billion in Bosnia and Herzegovina, reads a statement by the EBRD to Tanjug on Thursday.

For example, the agriculture sector, which accounts for about 10 per cent of GDP in Serbia and 6 per cent in Bosnia, has been particularly badly affected. Most of the arable land in flooded areas has been destroyed and the damage in both countries could be in the hundreds of millions in euros, the Bank said.

Power generation and mining has been heavily disrupted, especially in Serbia, where the damage to the state-owned power company EPS is likely to be extremely costly.

Serbia's largest mining complex Kolubara, crucial for the country's energy system as it provides coal to the thermal power plants that produce more than 50 per cent of the energy Serbia needs, has been flooded.

Roads and railways (as well as water supply and energy transmission infrastructure) have been badly hit too, which will cause major problems for the free movement of goods and people and affect businesses across the region.

The floods could also have a sizeable macro-economic impact on Serbia and Bosnia, affecting short-term growth and inflation as well as their policy priorities and the budget for this year.