Serbia plans to use international bond markets to pay for projects designed to double the rate of economic growth under the new economic plan.
This was stated by Finance Minister Sinisa Mali in an interview for Bloomberg, confirming that the country is coming out of years of austerity. Mali added that the Serbian government is aiming to increase annual growth to 7 percent within three years from about 3.5 percent now, which is largely dependent on at least 10 billion euros in infrastructure projects included in the new five-year economic plan.
“Growth rates are our key challenge”, Mali said.
The U.S. agency estimates that since his appointment as minister in May 2018, Mali has been a big proponent of increasing public and private spending to capitalize on record-low borrowing costs.
According to the Serbian government, it plans to raise two billion euros from global bond sales and 312 billion dinars (2.7 billion dollars) in the domestic market next year, which is slightly less than this year’s program.
As Mali says, most of the infrastructure spending over the next five years will be raised in international capital markets, including the green bond.
“Considering that the latest Eurobond came in at a 1.25 percent, I think the conditions are such that we should borrow in the market”, Mali said, adding that the Ministry is studying and selling debt in China.
According to him, at least one billion euros of spending will be earmarked for pollution, which will create a real opportunity for the first issue of green bonds and enable Serbia to show commitment and willingness to solve environmental problems.
Local currency debt of Serbia is likely to enter one of JPMorgan’s emerging markets indexes in the first half, after being placed on the watchlist in the first quarter.
Mali estimates that selling bonds with longer maturities and increased secondary trading will help Serbia qualify for Euroclear, another step that could boost demand and reduce costs.
It is stated that Serbia plans to offer dinar bonds with a maturity of 12 years and 20-year denominated securities denominated in euro in the first quarter.
