BELGRADE (Serbia), July 2 (SeeNews) – Serbia’s government and banks will fork out soft loans worth a combined 3.1 billion dinars ($47 million/33 million euro) over two years to support local producers of military hardware and railway rolling stock, the Economy Ministry said.
“The Economy Ministry will provide about 2.1 billion dinars worth of soft loans over two years that will be allocated in support of railway rolling stock producers,” the ministry’s State Secretary Nebojsa Ciric said in a statement on Wednesday.
The ministry will allocate some 100 million dinars in soft loans in support of Serbia's defence industry, Ciric said. Serbian banks will lend around 1.0 billion in soft loans to military hardware producers.
The soft loans with the so-called foreign currency clause in the lending programme will carry an annual interest rate of 3.0%, while the loans in dinars will have an annual interest rate of 9.5%, Ciric said in the statement.
Under a foreign currency clause, borrowers must pay interest rates pegged to the exchange rate of the dinar against a selected foreign currency at the time the loan was extended. The foreign currency clause is a mechanism that allows Serbian banks to protect themselves against the depreciation of the dinar. The Serbian dinar has lost around one-fifth of its value against the euro since September.
The first loans in support of the military industry are expected to be approved next week, while those in support of rolling stock producers will be extended in 10 days from now at the latest, Ciric said.
The soft loans in support of the military industry will be allocated to eight exporters and will guarantee employment for some 9,000 workers, Ciric said. The project will be controlled by Serbia’s Defence Ministry.
The loans in support of rolling stock producers will also be allocated to eight companies employing about 2,300 people.
(1 euro=92.9971 Serbian dinars)