Serbia’s capital Belgrade is considering issuing municipal bonds for the first time to refinance its debt to creditor banks, the city hall said on Thursday.
The economy of Belgrade was worth 14.88 billion euros ($16.97 billion) in 2014 and accounts for some 40 percent of Serbia’s gross domestic product. The city budget for 2015 was set at 80.2 billion dinars (666.25 million euros) with a deficit of 6.5 percent and debt to creditors of over 400 million euros.
In a statement, the city hall said Mayor Sinisa Mali and Citibank officials had “considered the idea of municipal bonds” and investments in the city of nearly 1.7 million people.
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“The City of Belgrade wants to refinance its amassed debt to banks of over 400 million euros to ease pressure on its budget,” Mali said in the statement, without elaborating.
He said there were no legal obstacles to a bond issue.
Municipal bonds in the Balkan republic are rare as towns prefer to borrow directly from banks, which in turn regard such placements as more secure than ones to companies and citizens.
Since the fall of strongman president Slobodan Milosevic in 2000, the city of Novi Sad, capital of the northern province of Vojvodina, and towns of Stara Pazova and Pancevo have issued municipal bonds through commercial banks.
Last November, the municipality of Sabac in central Serbia issued a bond through an Initial Public Offering (IPO).
Source; Reuters
