Serbia is set to receive a $1 billion loan from the United Arab Emirates, securing more advantageous terms as the Balkan nation says it faces resistance from many investors for its failure to adopt sanctions against Russia.
President Aleksandar Vucic signed the loan agreement with a 3 per cent interest rate during a visit to the UAE and talks with Emirati leader Sheikh Mohammed bin Zayed, with funds earmarked for debt servicing and energy investments. Finance Minister Sinisa Mali said the government in Belgrade would have faced more than double the amount of interest costs on the international bond market.
The loan agreement builds on stronger ties between the two nations over more than a decade, with multiple investments from the Gulf nation in the nation of 6.9 million. The UAE’s Etihad Airways owns a minority stake in national carrier Air Serbia — and an Emirati company agreed to develop a 3.5 billion euros real estate project on Belgrade’s riverfront.
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.
The ties to the Middle East offer an alternative to Vucic. His government has condemned Moscow’s invasion of Ukraine but hasn’t adopted European Union sanctions against its traditional ally, which continues to supply natural gas and political backing to Belgrade.
“We have to be prepared for that as well, to see everything from a strategic viewpoint, and therefore friendship and brotherhood with the Emirates is of essential importance,” Vucic said.
The UAE loan will save the government as much as $45 million in interest payments, Mali estimated, according to a statement. Public debt won’t exceed 60 per cent of gross domestic product.
Vucic said the fresh funds will alleviate budget needs as Serbia purchases “expensive energy on the market,” offering “full liquidity along with the solvency that we have.” His government said in April it would prefer bilateral borrowing to sell a Eurobond.
The two nations also signed a Comprehensive Strategic Partnership Agreement that “builds upon our strong bilateral ties and promises to enhance cooperation at all levels,” bin Zayed said in a tweet.
“We can rely on the Emirates whenever it’s difficult,” Vucic said.
