Photo: Pixabay/klimkinBefore the Serbian Parliament, there will be proposals for laws according to which Serbia should borrow another billion euros from various foreign and domestic banks. The Government of Serbia also proposes extending the repayment of two already existing loans of one billion euros each, which will increase the interest rate
As if life after EXPO does not exist, Government of Serbia she referred to Assembly a series of bills which, if adopted, will put Serbia in debt for more than one billion euros, plus the interest that will be paid on the loans.
The country also expects to delay the repayment of two loans to the Government of the United Arab Emirates and the Abu Dhabi Development Fund, both worth one billion dollars each, which will increase the interest rates of the loan to four percent, including administrative costs at the rate of 0,5 percent per year on the principal amount withdrawn and unpaid. loan, writes "Danas".
Old loans
In this way, instead of returning by the end of 2024 the billion dollar loan that it took from the Abu Dhabi Development Fund in 2022, Serbia will return that loan in 2026, so the interest rate will increase to four instead of the originally contracted three percent. percent.
The same is the case with another one billion dollar loan taken already long ago in 2014 from the Government of the United Arab Emirates. That loan was taken with an interest rate of two percent, but because it will not be repaid until August 2026, the interest rate will rise to four percent, writes "Danas".
Serbia was supposed to pay the principal of the loan from 2014 in full, in one installment, 120 months after the date of the first withdrawal of funds, that is, on August 14, 2024.
However, the Government of Serbia, in the explanation of the Bill on Confirmation of Amendments to the Loan Agreement, pointed out that it considered and agreed on the extension of the final date of principal repayment for an additional two years, i.e. until August 14, 2026.
The loan taken in 2022 was supposed to be repaid on December 9, 2024, but the Government of Serbia, in a letter dated June 25, requested through the Ministry of Finance to extend the due date of the installment to December 9, 2026.
As in the case of the loan from 2014, the Government of Serbia considered and agreed on the annexation of the loan agreement for an additional two years, but accordingly the fixed interest rate was increased to four percent per year.
It was evaluated as "the most favorable way to provide space for financial resources in accordance with the needs of public spending and economic trends, considering the efforts that the Government of Serbia invests in preserving the stability of the public finance system and implementing the budget."
New loans
When it comes to new borrowings, the approval of a loan from the French Government of 121,5 million euros is awaited, which will primarily be used for the procurement of Serbian goods and services or goods and services from third countries.
Borrowing from the German banking group KfW is also planned, one for the energy efficiency project in public buildings worth 50 million euros and the other for the Biomass Market Development Program, which should not exceed 20 million euros.
Serbia is also waiting for a loan from the Chinese Bank worth around 184 million euros, and the Budget Law for 2024 foresees borrowing from Chinese banks for the design and execution of works on the construction of sewage infrastructure in Serbia, in the amount of up to 190 million euros.
Serbia is seeking loan approval from four more banks, one of which is OTP, which should lend 12 billion dinars to the construction of the bypass around Kragujevac.
Serbia is also seeking a loan from Inteza Bank worth 15 billion dinars and a loan from Unikredit Bank of 11,7 billion dinars to finance the construction of the Ruma - Šabac - Loznica road.
The state will borrow RSD 42 billion from Bank Poštanska Štedionica to finance the construction of urban infrastructure and the National Stadium with access roads.
Everyone gets into debt, but...
Economist Saša Đogović tells "Vreme" that every country in the world borrows, but that it is important whether it is economically justified, i.e. whether the projects that are credited directly or indirectly will begin to return the invested money in the near or mid-term future.
He warned that, if this does not happen and if the projects do not fully return the invested money or if they return it only in a small part, then it will be borne by the budget of Serbia, that is, the citizens.
Đogović also said that loans from the German banking group KfW for energy efficiency projects in public buildings and for the Biomass Market Development Program, as well as a loan from the Chinese Bank for the design and construction of sewage infrastructure in Serbia, are justified, because these loans are used to realize goals of the Green Agenda.
Absence of tender
He pointed out that the question, when it comes to the loan from the Bank of China, is whether a tender could have been organized to find more favorable sources of financing, because in an open market competition, a lower price for the construction of the sewage system would very likely be achieved.
Đogović pointed out that Chinese banks, without a tender, exclusively finance their contractors, which is why there are reasonable suspicions that a certain price is agreed upon, which opens up the possibility of bribery and corruption and price inflation.
"The construction of the sewage network is not disputed, but the way in which it is financed and built," pointed out Đogović.
The National Stadium – a political project
He also emphasized that, when it comes to the construction of the National Stadium, there are more important projects, and that the National Stadium is a political project with a "marketing signal", and that it is much more profitable to invest in the circular economy than in the National Stadium, as this would achieve and economic and environmental effects, and with the National Stadium "we are not achieving anything".
And if it is really needed, it should have been built by the Football Association of Serbia.
Focus on EXPO 2027
Speaking about the extension of the two already existing loans of one billion euros each taken from the Government of the United Arab Emirates and the Abu Dhabi Development Fund, Đogović estimated that the money planned for their repayment is probably focused on the EXPO 2027 project.
He pointed out that the two years of extending the repayment of those loans, 2025 and 2026, are crucial for the realization of this project.
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