Serbia wins $1bn loan from UAE amid headwinds on Russia
Serbia is set to receive a $1bn loan from the United Arab Emirates, securing better terms, as the Balkan nation says it faces resistance from many investors over its failure to pass sanctions on Russia .
President Aleksandar Vucic signed the loan agreement with a 3% interest rate on Sunday during a visit to the United Arab Emirates and held talks with Emirati leader Sheikh Mohammed bin Zayed, with funds earmarked for the service debt and energy investments. Finance Minister Sinisa Mali said the government in Belgrade would have faced more than double the amount of interest charges on the international bond market.
For the latest headlines, follow our Google News channel online or through the app.
“It’s much easier to breathe now – we’re much safer,” Vucic said in Abu Dhabi, praising the Gulf nation, which offered loans to Serbia during a budget overhaul in 2014. The leader Serb said his nation would face “immediate resistance”. on the markets, “because it is above all a question of Western financial investors”.
The loan deal builds on stronger ties between the two nations for more than a decade, with multiple investments from the Gulf nation in the nation of 6.9 million. Etihad Airways of the United Arab Emirates has a minority stake in national airline Air Serbia – and an Emirati company has agreed to develop a 3.5 billion euro real estate project on Belgrade’s waterfront.
Still, the largest former Yugoslav republic is also considering a new stand-by arrangement with the International Monetary Fund for “additional support”, Vucic said, without providing details.
Links with the Middle East offer an alternative to Vucic. His government has condemned Moscow’s invasion of Ukraine, but failed to adopt European Union sanctions against its traditional ally, which continues to supply Belgrade with natural gas and political support.
“We also have to prepare for this, to see everything from a strategic point of view, and therefore friendship and brotherhood with the Emirates is of essential importance,” Vucic said.
The UAE loan will save the government up to $45 million in interest payments, Mali estimated, according to a statement. Public debt will not exceed 60% of gross domestic product.
Vucic said the new funds would reduce budgetary needs as Serbia buys “expensive energy on the market”, providing “full liquidity with the solvency we have”. His government said in April that it would prefer bilateral borrowing to the sale of a Eurobond.
The two countries also signed a Comprehensive Strategic Partnership Agreement which “builds on our strong bilateral ties and promises to enhance cooperation at all levels,” bin Zayed said in a tweet.
“We can count on the Emirates whenever it’s difficult,” Vucic said.
Read more: EU says Serbia and Kosovo settle dispute over identity documents for border crossing