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The Minister of Finance says that paying a hundred euros to the citizens of Serbia is really a sign of how strong the state is and how, as he says, it is able to bear the burden of the crisis. But, almost simultaneously with the news of helping citizens, comes the news that Serbia has borrowed again by selling two billion euro government bonds on the international capital market. While the government claims the loans were extremely cheap, some economic experts claim the exact opposite: that the state is going into “debt bondage.”
An economic measure that the Serbian government recently withdrew is unique in the region: instead of the IMF, Serbia again borrowed on the international capital market.
Serbia sold government bonds in the amount of two billion euros, at an interest rate of around three percent. Whoever “manages” the Serbian budget, Finance Minister Siniša Mali says: the transaction was very successful and the interest of investors shows how much they trust Serbia.
“We were listed again on the London Stock Exchange, and there was great interest. For those two billion euros, more than 300 investors applied and the demand amounted to seven billion euros. During the crown crisis and the financial crisis Serbia managed to do that. “The first country to enter the market with a non-investment rating and without the support of the European Central Bank, because we are not members of the EU,” said Finance Minister Sinisa Mali.
The debt will be raised in seven years, that is, 2027. And Serbia could have borrowed cheaper? In June last year, government bonds were also issued at an interest rate much more favorable than it is today, at around 1.5 percent. Mali says: It couldn’t be cheaper now, due to the crisis in the world. Economists, however, claim otherwise. They say: the state is entering “debt slavery” with the latest movements.
“If you look at the interest rates that other countries in the region borrowed, which have the same or worse credit rating than Serbia, like Montenegro, which has a worse credit rating than Serbia, borrowed 2.5 percent from Earlier this year, “Romania, which has a slightly better credit rating than Serbia, owed two percent, Croatia 1.13 percent,” explains economist Goran Radosavljevic.
Radosavljevic explains for the first half that Serbia could have received a loan from the EU and the International Monetary Fund, and that it would have been much more favorable. However, Jorgovanka Tabaković responds to criticism and says the allegations of further indebtedness “are not true.”
“The International Monetary Fund funds offered through the Rapid Financing Instrument (RFI) imply that the country that uses them has problems financing the balance of payments, and Serbia is not one of those countries. The withdrawal of these funds is not as favorable, except for relatively small amounts and in a shorter period of time than what Serbia managed to obtain by issuing Eurobonds, “he said.
“I think they are doing this consciously for political reasons, the elections are approaching, it is not very popular to say that the situation is bad, although it is objectively bad and, of course, we can always speculate that the funds you take from the international financial institutions have strict control over their costs. ” , and the funds that are more expensive to buy are traded in the market; you can spend them however you want, because it is not really important for creditors that it is a democratic country, “adds Radosavljević.
Serbia’s last entry into the international capital market was characterized by state leadership as a movement “for textbooks and history.” The divided views of the profession and the government will be a distant story when debts to Serbian citizens and the budget reach payment.
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