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The loan from the UAE increases Serbia’s exposure to dollar debt

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The President of the Executive Board of Raiffeisen Bank in Serbia, Zoran Petrović, says that the loan that Serbia will take from the United Arab Emirates seems favorable at first, but he added that the cost of borrowing cannot be determined only on the basis of the interest rate at which the loan is taken.

“In order to comment on the price, it is not enough just to know that it is three percent, but for what period the loan was taken. If today the USA borrows from one to 10 years over three percent, it seems favorable at first glance,” Petrović said for Bloomberg Adria TV. 

Petrović reminded that the need for financing next year will be significant and that Serbia will certainly have a deficit of around three percent of GDP next year as well. 

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When asked how the strong dollar affects the state of Serbian public debt, he said that in recent years a lot has been done to reduce the exposure to dollar loans, and that the state has taken certain instruments to protect against currency risk. 

“The last time I looked at the dollar debt in July, it was 11 percent of the total debt. And this debt will contribute to increasing that participation, it is not in our favor, but the risks are not so great that it would represent a significant danger for Serbian public finances “, stated Petrović, Bloomberg Adria writes.

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