We invested almost 850 million euros in Serbia last year. This is a record level of investment for us, which is 30 percent higher than the previous year. Serbia is a priority country for the European Bank for Reconstruction and Development (EBRD), and last year, it ranked among our top five largest markets for the first time. We are an institution driven by demand, investing where we see opportunities for impactful projects. We are pleased with our increasing presence and business operations in Serbia.
Our new strategy clearly outlines the further path towards expanding and strengthening our partnerships in Serbia, contributing to the country’s economic success and its closer alignment with the European Union. Our key priorities will be accelerating the transition to green energy, particularly through renewable energy sources and energy efficiency, enhancing the competitiveness of the private sector, as well as financing environmental infrastructure and regional connectivity projects. Mateo Colandjeli, the Director of the European Bank for Reconstruction and Development for the Western Balkans, stated this in an interview with ‘Politika.’ Currently, preparations are underway for the Western Balkans Investment Summit 2024, which will take place at the EBRD headquarters in London on February 26th.
Prime Minister Ana Brnabić, along with other heads of government from the region, is expected to participate in the summit. The goal of the meeting is to highlight potential opportunities for investment and business in the Western Balkans region, as well as to promote regional and international projects
I see that in both the previous strategy and the current one, there is a focus on the energy sector. Could you summarize what has been done so far in this area with the support of EBRD financing?
Last year, the energy sector was at the center of our attention, primarily through a liquidity loan of 300 million euros to assist EPS during the energy crisis caused by the conflict in Ukraine last winter. Concurrently with this loan, in partnership with the authorities in Serbia, we actively participated in significant reforms in this sector, including setting realistic goals for decarbonization and launching an incentive-driven three-year plan for the auction of wind and solar capacities totaling 1,300 megawatts. We were very pleased as our technical support facilitated the successful completion of the first auction in Serbia last year, and now, within that framework, we are working on financing a new wind farm with a capacity of 94 megawatts. Regarding EPS, we have provided a substantial package of technical assistance to support management standards. Additionally, we will finance the upgrade of hydroelectric plants and hope to soon sign a new loan of 67 million euros for the Vlasinske hydroelectric power plants.
The EBRD has already stated that the transition away from coal is inevitable. How far have we progressed with that?
We are pleased to see Serbia’s commitment to a gradual phase-out of coal by 2050 in the final draft of the National Energy and Climate Plan, a crucial strategic document defining the process of energy transition. This will undoubtedly need to be a gradual path, requiring complementary measures, including significant investments in renewable energy. According to the same draft of this strategic document, renewable sources are expected to reach a level of 45 percent of total energy sources by 2030.
Careful management of socio-economic implications will also be necessary, along with long-term planning, to ensure a socially just transition. At the EBRD, we are ready to support Serbia on this journey, both through investments in renewable energy and by encouraging local economic development in areas most affected by this transition.
Much is being said about the green transition. What specific projects are planned in this regard?
An increasing share of our activities is dedicated to the green transition in all sectors. Here are several examples. In the energy sector, aside from financing renewable energy sources, we are heavily involved in building energy efficiency, particularly through extensive programs in preparation for public buildings and residential blocks. Additionally, we will soon sign a financing agreement of 30 million euros to introduce renewable energy into district heating systems in ten municipalities. In the infrastructure sector, we are funding a large national program to build a modern solid waste management system. In the field of transportation, we are supporting the shift from road to rail with numerous investments, including 550 million euros for the Belgrade–Niš high-speed railway. In the private sector, we provide funds and consulting services to small and medium-sized enterprises to help them achieve the environmental standards necessary for integration into European value chains.
You are actively engaged with the local private sector, channeling funds through various banks and leasing companies. What is the EBRD’s plan for investments in this sector in the upcoming period, and how satisfied are you with the way the private sector takes up and utilizes the allocated funds?
Over the past five years, our financing for small and medium-sized enterprises through partner banks and leasing companies has reached a total of 1.5 billion euros. Currently, we collaborate with nine banks and four leasing companies. The funds have primarily been used for investments in competitiveness, green transition, and raising standards in line with the best European practices. We are very satisfied with this collaboration with local banks and leasing companies, which typically involves blending loans with grants from the EU and funds from other donors. Looking ahead, we are working on launching a new credit line to assist small and medium-sized enterprises in financing investments in digitization. We will continue to focus particularly on less developed regions in the country, as well as on businesses led by women and young entrepreneurs.
I recently heard from EBRD representatives at a meeting that you are doing the most work in Serbia, more than anywhere else. Why is that? Is our transition more needed than others, or do we have more ready projects, capacities, and administration?
As I mentioned earlier, Serbia was among the top five markets for the EBRD last year, alongside countries like Turkey, Ukraine, Poland, and Egypt. This means that, according to any comparative metric, such as per capita or per unit of GDP, we invested more in Serbia than in any of these larger economies. One of the reasons for this is internal – the Western Balkans is a priority region for the EBRD, and we allocate significant resources for our operations here.
However, the main explanation lies in the demand for our support and the opportunities we have identified in this market. I would particularly mention three areas: in the energy sector, the accelerated focus on renewable energy and energy efficiency, driven by the energy crisis last winter; in infrastructure, the government’s strong emphasis on investing in transportation and environmental projects, including public-private partnerships; and in the small and medium-sized enterprise segment, the vast network of partner banks and leasing companies that enables us to channel significant financial resources into the real economy.
The EBRD has announced that it will most likely finance the construction of the highway Niš–Priština–Tirana. What is the current status of this project?
This is one of the leading projects for regional connectivity and part of the central network of transportation infrastructure in the Western Balkans supported by the EU. From now on, together with the EU and the European Investment Bank, we are investing in the construction of the first section Niš–Pločnik. The initial section of 5.5 kilometers has already been completed and is now open to traffic. Tenders for the remaining sections of this road are expected in 2024 and 2025.
Serbia became a member of the EBRD in 2001. How do you assess the success of this collaboration, and how much funding have you invested in how many projects over more than two decades?
We are the leading investor in Serbia, having invested almost nine billion euros in the country through 348 projects since the commencement of our business activities. Nearly 70 percent of these funds have been allocated to the private sector, encompassing a mix of corporate loans, equity investments, project financing, and credit facilities for small and medium-sized enterprises.
Nearly half of our current portfolio consists of investments in the energy and infrastructure sectors, often in partnership with the public sector. Wherever possible, we aim to maximize opportunities for mobilizing private capital, ranging from renewable energy projects to significant public-private partnerships, such as the “Belgrade Airport” and the waste management facility in Vinča. We are very pleased with our operations in Serbia, and in line with that, we have expanded our presence in the country with almost 70 experts now based in our regional hub in Belgrade.
What is your latest economic assessment for Serbia, and what economic growth do you predict?
In line with the expected global recovery, we anticipate that economic growth in Serbia will reach 3.5 percent in the year 2024. In the short term, negative risks could arise from the slowdown of economic activities in export markets in the Eurozone, persistent inflation eroding disposable income, and reduced availability of credit. In our opinion, the medium-term outlook remains robust, supported by macroeconomic stability and a strong influx of both public and foreign investments.
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