Secretary of State Madeleine K. Albright pledged $5 million in budgetary assistance to the Serb entity in Bosnia yesterday in recognition of its strong support for the Dayton peace process.

Albright made the offer during a meeting with the new, moderate Bosnian Serb prime minister, Milorad Dodik, who took office three weeks ago.

When Dodik turned up for his appointment, Albright "felt like a breath of fresh air had blown through the room," State Department spokesman James P. Rubin said.

Later, Rubin said in a written statement that Albright expressed confidence that the election of Dodik "marks a turning point" for the Serbian entity in Bosnia and for Bosnia-Herzegovina itself.

Since taking office last month, Dodik "has already taken a series of impressive steps to stabilize the political and economic situation in the Republika Srpska," Rubin said.

Dodik cited steps to restart communications and transport links with other areas of Bosnia, to stop corruption and misappropriation of funds of the previous government, and to install fiscal and economic reforms to permit the expansion of international economic assistance to the Serb sector. He also has called for the voluntary surrender of those indicted for war crimes.

When he took office, Dodik replaced supporters of Radovan Karadzic, the former Bosnian leader who has been indicted by the U.N. war crimes tribunal.

Albright assured Dodik of expanded U.S. and international assistance "as long as his government continues to actively implement the Dayton agreement," Rubin said.

Dodik informed Albright of his government's plans to facilitate the return of 70,000 refugees and displaced persons to the Serb entity in Bosnia this year, Rubin said.