Demostat: Serbia Seeks Reprogramming of Chinese Debt, China Refuses

The Government of Serbia recently tried to agree a reprogramming of its obligations toward Chinese creditors, but the partners from Beijing were not interested in any cessions, announced the Demostat portal.

As announced, after the negative response arrived from Beijing, the president of Serbia, Aleksandar Vucic, asked the prime minister of Luxembourg, Xavier Bettel, for help on the sidelines on the European summit in Moldova in early June.

The Government of Serbia recently announced a wide-reaching program of public spending – from raising salaries in the public sector and pensions to giving RSD 10,000 to each child up to 16 years of age.

– The new package, as the Fiscal Council calculated, will cost EUR 550 million, and although the minister of finance, Sinisa Mali, assures us that there is money for these measures, the events behind closed doors indicate that the state is rapidly trying to clear space in other places in order to release the funds for the measures presented by president Vucic – Demostat indicates.

According to the data of the Public Debt Administration, Serbia’s obligations toward the Export Import Bank of China, the institution which nearly all credits from this country to Serbia go through, currently amount to a total of EUR 2.26 billion.

Furthermore, there is also a debt of EUR 23.78 million toward the Hungarian branch of the Bank of China for the construction of the sewer infrastructure in 11 towns throughout Serbia.

For all these loans, Serbia will have to secure EUR 128 million just to repay the principal amount, as shown by Demostat’s calculation based on the data from the 2023 state budget.

– Not only do the interests, which are most frequently at 2-3% for the Chinese loans, need to be added to the principal amount, but from next year, Serbia is also looking at the beginning of the repayment of the loans worth EUR 706 million, for which the grace period lasted until now – the portal writes.

That means that, as soon as next year, the budget expenditures for the Chinese loans will drastically increase.

However, even that’s not all, because the amount of EUR 2.2 billion, which is Serbia’s current debt toward the Export Import Bank of China, is much lower that the total amount of the loans agreed with this bank.

Serbia has signed loans worth at least EUR 4.3 billion with the Chinese, of which EUR 2.2 billion is only the current debt.

Vlada Republike Srbije

Fiskalni savet Republike Srbije

Ministarstvo finansija Republike Srbije

Uprava za javni dug

Bank of China Srbija a.d. Beograd

Government of Serbia

Government of Luxembourg

Fiscal Council

Ministry of Finance

Public Debt Administration

Bank of China

Export Import Bank of China

Xavier Bettel

Aleksandar Vucic

Sinisa Mali

Beijing

raising of salaries in the public sector