“More focus on promoting local currency financing for SMEs”, News
The EBRD and Serbia have agreed to increase their focus on promoting local currency financing for SMEs in the country.
An MoU “will pave the way for the EBRD (European Bank for Reconstruction and Development) to start using donor funds for its local currency financing program, which will make dinar loans even more affordable for local businesses. The document was signed today in Belgrade by the Ministry of Finance, the National Bank and the EBRD,” the bank announced on its website.
National Bank of Serbia (NBS) Governor Jorgovanka Tabakovic said during the signing of the memorandum of understanding that the NBS will continue to support projects that are in the general interest of the citizens of the Republic of Serbia and the development of the economy and the local financial market.
“The EBRD’s readiness to finance small and medium-sized companies in local currency, bearing in mind that SMEs are a generator of growth and development in many countries, will undoubtedly support further growth of economic activities. Some of the key preconditions for the realisation of this, and many other projects, are the results that have been achieved in strengthening the macroeconomic environment. Political, macroeconomic and financial stability are essential for restoring investors’ confidence in domestic economic potential and economic policy,” said the governor.
According to the MoU, the parties recognize the importance of local currency intermediation and local capital market development and agree to increase efforts to promote local currency lending which shields businesses from foreign exchange risk, the EBRD said, adding that its representatives and those of the Serbian government and NBS “will now meet on a regular basis to consider specific steps, including technical assistance, to promote the local currency and money market.”
The MoU signing “comes just weeks after the EBRD launched its inaugural bond in Serbian dinar, which is also the first ever supranational dinar bond,” the bank said, adding that “the proceeds of the 2.5 billion dinar issue will be on-lent to local enterprises looking to reduce their foreign exchange risk.”
Last year, the EBRD undertook a number of activities to develop local currency and local capital markets in the Western Balkans, notably the establishment of SEE Link, a virtual exchange which allows securities trading across the region. To date, the EBRD has invested nearly EUR 4.5 billion in a variety of sectors of the Serbian economy, the bank said.
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