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Serbia will receive a $1 billion loan from the United Arab Emirates to secure more favorable terms, as the Balkan country says it faces resistance from many investors. Failed to impose sanctions on Russia.
On Sunday, President Aleksandr Vucic signed the loan agreement at an interest rate of 3% during his visit to the UAE and held talks with UAE leader Sheikh Mohammed bin Zayed, with the funds dedicated to For debt service and energy investment. Finance Minister Sinisa Mali said the Belgrade government would face more than double the cost of interest in the international bond market.
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“It’s easier to breathe now — we’re safer,” Vucic praised the Gulf state in Abu Dhabi, which provided loans to Serbia during fiscal reforms in 2014. The Serbian leader said his country would face “immediate resistance” in the market “because it is mainly Western financial investors.”
The loan agreement builds on more than a decade of closer ties between the two countries, with the Gulf state making several investments in the $6.9 million country. The UAE’s Etihad Airways has a minority stake in national airline Air Serbia, and an Emirati company has agreed to develop a €3.5 billion real estate project on Belgrade’s riverfront.
Still, the largest former Yugoslav republic is also considering a new stand-by arrangement with the IMF for “additional support,” Vucic said, without giving details.
Relations with the Middle East offer Vucic an alternative. His government has denounced Moscow’s invasion of Ukraine but has refrained from imposing EU sanctions on its traditional ally, which continues to supply Belgrade with gas and political support.
“We have to prepare for that too, looking at everything from a strategic point of view, so friendship and brotherhood with the UAE is crucial,” Vucic said.
Mali estimates that the UAE loan will save the government as much as $45 million in interest, according to a statement. Public debt will not exceed 60% of GDP.
Vucic said the new funds would ease budget needs and provide “sufficient liquidity and solvency that we have” as Serbia buys “expensive energy in the market.” His government said in April that it would prefer to borrow bilaterally rather than sell Eurobonds.
The two countries also signed a comprehensive strategic partnership agreement that “builds on our strong bilateral relationship and commits to strengthening cooperation at all levels,” bin Zayed said in a tweet.
“We can rely on Emirates whenever we get stuck,” Vucic said.
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