The Serbian government has utilized the scorching days of July to introduce a series of bills in parliament, aiming to secure over one billion euros in new debt. These funds are earmarked for various ongoing and upcoming projects across the country.
If all eight proposed laws pass parliamentary scrutiny, Serbia will effectively add more than one billion euros to its national debt, inclusive of interest payments on these loans.
Additionally, Serbia anticipates deferring repayment on two loans from the Abu Dhabi Development Fund, totaling one billion dollars. However, this delay triggers an interest rate increase to four percent, plus administrative costs of 0.5 percent annually on the outstanding loan amounts.
Among the pending loans, Serbia awaits approval from the French government. A financial support protocol signed in September last year outlines a loan from the French Treasury totaling 121.5 million euros. This funding is primarily designated for purchasing French goods and services, with potential allocations for Serbian or third-country products and services, not exceeding 50 percent of the support amount.
Interest on this loan will be determined based on the Commercial Interest Reference Rate (CIRR) published by “Bpifrance Assurance Export” as of October 17, 2023, augmented by a reserve margin ranging from 0.2 to 0.44 percent over six to twelve months.
Next in line is a loan agreement with KfW for an energy efficiency initiative in public buildings, amounting to 50 million euros. Interest on disbursed amounts will be based on swap rates from Reuters or Bloomberg terminals, plus a margin of 0.60 percent annually. Repayment starts with an initial installment due on December 30, 2028, followed by biannual payments until December 30, 2038.
Serbia also seeks a 20 million euro loan from KfW for its Biomass Market Development Program, targeting the conversion of district heating systems to renewable energy sources. Repayments, beginning December 30, 2028, consist of biannual installments escalating to 953,000 euros for the final eight payments.
Further financial commitments include a pending 183.9 million euro loan from the Bank of China, intended for the “Clean Serbia” project’s sewage infrastructure development. This initiative, budgeted at 216.4 million euros, will significantly enhance wastewater management, with the loan repayable over 180 months at a variable interest rate pegged to the six-month EURIBOR plus a 1.75 percent margin.
Moreover, Serbia anticipates loans from OTP Bank, Bank Intesa, and Unicredit Bank totaling billions of dinars for infrastructure projects including bypass construction and urban development, notably financing the National Stadium.
These loans underscore Serbia’s strategic investment in national development, leveraging international financial partnerships to bolster economic growth and infrastructure enhancement across the country.
