It can be seen from the contract that the Government asked that Fund to participate in the financing of support for the budget of Serbia.
The money is borrowed for “financing of support to the budget of Serbia, provision of current liquidity, refinancing of due obligations on the basis of public debt”, it is written in the draft law on the confirmation of the Loan Agreement, which has been referred to the parliamentary procedure.
The Government of Serbia will pay interest at a rate of 3 percent per year, as well as a fee to cover administrative costs of the loan at a rate of 0.5 percent per year on the withdrawn and unpaid principal amount of the loan.
Serbia will repay the principal amount of the loan in full, in one installment, due two years after the date of the first withdrawal.Â
An annual fee of 0.5 percent per year is foreseen for special contractual obligations that the Fund assumes at the request of the Government of Serbia. It is a potential obligation that arises only if the Serbian side sends a special request for contractual obligations of that type.
Interest and other fees are paid semi-annually, and the first interest is due six months from the date of withdrawal.
The contract states that the loan principal, interest and other fees are to be paid in Abu Dhabi or at a place that the Fund reasonably requests.
The Government’s right to withdraw money from the loan expires on September 1, 2024.
The contract states that the Abu Dhabi Development Fund will, at the request of the Government of Serbia, purchase any currency that Serbia needs to pay or reimburse the costs of purchasing goods that are financed from the loan.
The law was referred to the parliamentary procedure under an urgent procedure. The reason for this is that the withdrawal of funds is conditional upon the entry into force of the law, and in order to fulfill international obligations.
The explanation states that the conflict between Russia and Ukraine, the energy crisis, and Western sanctions against Russia have led to an increase in the price of food, energy, metals, and fertilizers, which has caused a food crisis and an inflationary wave.
The consequences of all this are, as he writes, particularly visible on the financial market, where the growth of reference interest rates in key economies has affected the fall in the cost of capital and borrowing costs, it is stated.
“Access to the capital market is limited, especially for developing countries, which are forced to seek the necessary funds from other sources, if possible”, the contract states.
The contract was signed by the Minister of Finance Sinisha Mali and the Director General of the Abu Dhabi Development Fund, Mohammed Saif Al Suwaidi, Nova Ekonomija reports.
