UAE loan to go towards repaying costly loans, infrastructure

KOPAONIK - The USD 1 billion loan that Serbia is set to obtain from the United Arab Emirates (UAE) is very favourable and the money should be used to repay or refinance the most expensive loans and invest in development, the president of the National Bank of Serbia (NBS) Council of the Governor Nebojsa Savic said on Thursday.

"The funds should be used to repay or refinance the most expensive loans to ease the interest burden. The other part of the funds should be used for investments in major development sectors - infrastructure and education - and for consolidating some troublesome companies in the public sector," Savic told the RTS.

The loan has been approved under very favourable conditions and at a good moment, because Serbia will have to draw up the new budget after the parliamentary elections, Savic said.

The USD 1 billion loan "must be used wisely and should bridge the gap between government revenues and expenditures, which so far have been going to sheer spending. This time, part of the funds must go towards development and easing the interest burden," Savic said.

He said that the loan is a signal of confidence about Serbia's prospects for the future.

"All international studies indicate that Serbia has great potential, but we are not utilising it. This could be a good incentive and the start of a new stage in which we can transform the potential into a development effect," he said.

Interest rates on the global market are on the increase, and amount to around seven percent, Savic added.

Photo Tanjug/M. Jelesijevic

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