The Serbian government has announced that it will provide subsidies of up to €10,000 for investors creating new jobs in the country.

According to economy minister Mladjan Dinkic, "nothing is as expensive as closed factories" and the program is intended to offset the impact of the global downturn on Serbia, Reuters reports.

Belgrade has doubled the level of incentives available under the scheme, which has been in place since 2006 and has generated over 17,000 jobs.

He was speaking following talks with Italy's economic development minister Claudio Scajola in order to sign a major new hydropower agreement and is hoping to attract further investment from the country.

Economic growth in Serbia in recent years has been driven by borrowing and foreign direct investment, but fears have grown that unemployment could rise following the financial markets crisis.

Serbia is a democratic republic in eastern Europe with a population of around 7.5 million.