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Chinese loans to Serbia “heavy” 3.7 billion euros

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Although it attracted the most public attention, during the Third Forum for International Cooperation “Belt and Road” in Beijing, not only the Free Trade Agreement between Serbia and China was signed, but a total of 18 agreements, including three related to the financing of infrastructure construction.

Thus, the already large “basket” of Chinese loans will be increased by another four billion euros worth of arrangements. That’s why we give an overview of the credit links between Serbia and China, noting that according to the last, August section of the Public Debt Administration, we only owe 2.43 billion euros to the Export-Import Bank of China, while the total debt to China amounts to 3.7 billion euros.

An insight into the budget proposal for 2024, and into the funds planned for program and project loans, gives a little more detail about those two projects.

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For the construction of the highway Belgrade – Zrenjanin – Novi Sad in the next year, 1.4 billion euros are planned through project or program borrowing. Vesić, by the way, said that it is a highway with a length of 105 kilometers, and he announced the start of the works for next year. The details of the loan arrangement are not yet known.

As for the “Smile of Vojvodina”, for 2024, the republic’s coffers plan to borrow 220 million euros from Chinese banks for the high-speed road from Bački Breg to Kikinda, also through project and program loans. It follows from the statements of Minister Vesić that it is already being counted on the fact that the road will go further to Srpska Crnja, that is, it will be about 200 kilometers long.

Vesić, by the way, stated in Beijing that the total value of these two infrastructure arrangements is “almost four billion euros”, which could mean that the construction of “Smile of Vojvodina” is estimated at around 2.6 billion euros. No details of this arrangement have been released.

The third “new” loan refers to the purchase of five Chinese high-speed trains, and while the budget for this purchase is planned for 65 million euros, Vesić stated that the negotiated price is 54 million euros, and that these trains are expected to enter service in 2025.

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On October 10 , a loan agreement was signed with the Chinese Export-Import Bank for the construction of a bypass around Novi Sad with the construction of a bridge over the Danube and access roads, worth 149.2 million euros, with a maturity of 15 years, with a five-year grace period , and with interest in the amount of six-month Euribor plus a margin of 1.9 percent per year.

The construction of the Serbian-Chinese industrial park “Mihajlo Pupin” in Belgrade is also on the budget list for financing by Chinese banks, which would be a job worth 139.9 million euros.

Otherwise, it is planned to borrow a total of 1.44 billion euros from Chinese banks in 2024 , and the largest loan, worth 680 million euros, would relate to the construction of Sector C of the bypass around Belgrade.

Chinese loans we are already repaying

For ten years, Serbia has been borrowing for various infrastructure projects from the Export-Import Bank of China, mostly in dollars.

Interest rates range from two percent for the sections of the high-speed railway Belgrade-Stara Pazova and Novi Sad-Subotica, over 2.5 percent for the construction of the section of the highway “Miloš Veliki” from Surčin to Obrenovac, up to an interest amounting to six-month Euribor + 2, 70 percent for the construction of the Obrenovac-Novi Belgrade heating pipeline.

With the Export-Import Bank of China, we have borrowed or are already repaying a total of 13 loans, and the debt balance according to the budget proposal for 2024 is 2.37 billion euros.

The most recent loan we took out relates to the construction project of the high-speed road Novi Sad-Ruma, also known as the “Fruškogorski Corridor”, and the first installment of the loan worth 142.6 million euros is due on November 15, 2027.

Although we have the most loans in its portfolio, Export-Import Bank Of China is not the only Chinese bank with which we borrowed.

With the Bank of China Limited Hungarian Branch, we have a loan for the construction of sewers in 11 cities and municipalities, and that is 38.9 million euros, at an interpolated interest rate plus a one percent margin. And we will repay that loan only from September 2027.

At the moment, by the way, we are repaying 10 loans to Chinese banks, and we have a “check” for four – for the construction of the Novi Beograd-Obrenovac heating pipeline, the section of the Iverak-Lajkovac road, the Fruškogorsk corridor and sewage systems within the “Clean Serbia” project.

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