Further indebtedness of Serbia – among other things for servicing the debts of “Srbijagas” and the continuation of works on the road Pojat-Preljina – arrived on the agenda of the Assembly today. If they are voted on (and it would be a precedent not to be), we will add another 1.9 billion euros to the total debt in one day.
On the agenda of the extraordinary session of the Assembly of Serbia, among other things, are proposals for agreements on additional borrowing and guarantees that the Government of Serbia gives to public companies.
According to the data published on the portal of the Serbian Parliament, the state will borrow as much as 745 million euros from Chinese banks alone.
Serbia takes one loan from Export-Import Bank. These borrowed funds would be used for the Project of construction of a fast road on the route Novi Sad-Ruma, by the “Fruska Gora corridors”.
Serbia takes another loan from the “Chinese Bank”, a branch from Hungary.
And that’s not the end of the list.
The state will also be the guarantor of the loan that JP Srbijagas takes from several banks. It is about the amount of as much as 150 million euros.
The state will also take a project loan from the Development Bank of the Council of Europe, for the realization of the Training Center for Dual Education in the amount of 20 million euros.
The Multilateral Investment Guarantee Agency will be another lender, and the loan of as much as 400 million euros will be used to finance certain construction services by the company “Bechtel Enka UK Limited”, as well as for the needs of the company “Corridors of Serbia” in connection with further construction. corridor of the highway E-761, sections from Pojat to Preljina.
Some of the millions of loans that will be approved in just one day, will be used for wastewater treatment of the central sewage system of Belgrade, the implementation of solid waste programs, as well as the implementation of the second phase of the Climate Change and Irrigation Resistance Program in Serbia.
Why does the state choose Chinese banks?
According to economist Goran Radosavljevic, credit interest rates are currently low everywhere, so the Chinese have 2 to 3 percent.
“However, borrowing from the European Investment Bank is 0.5 percent, even lower than that. If you are wondering why we are borrowing from Chinese banks, the explanation is simple – there is no control over bilateral borrowing, they are ready to give money for whatever it is necessary “, explains Radosavljević.
According to our interlocutor, the other reason for borrowing in Chinese banks is the so-called “commodity loans”, because by giving money, they participate in the direct construction of what is the reason for the loan.
“On this side, the state gets the opportunity not to go to the tender, it doesn’t have to respect God knows what laws, the commission can be easily collected and it is generally easy to manage that money – no one asks you what you do with it,” Radosavljevic says. According to the interlocutors of our portal, apart from the fact that you have to go to public tenders then, the controls are more complex.
“Such loans are cheaper, but it is obviously not appropriate for the state to borrow like this,” says Radosavljevic, adding that now, for almost all infrastructure projects, it is borrowing in the east.
As he explains, in the West, apart from the control of credit spending, some other conditions are required, which are mainly related to democracy, and the state is obviously not ready to deal with that.
“It is the same as when citizens decide for cash loans, and not some others. When you take a cash loan, they do not ask you anything as long as you repay the debt,” Radosavljevic explained at the end, Nova reports.
