Foreign exchange reserves reach EUR 12.1bn

Foreign exchange reserves reach EUR 12.1bn

Predominantly, this resulted from growth in the FX reserves of the National Bank of Serbia (NBS), based mostly on new borrowing, but also reduced need to defend the domestic currency value aggressively, IZIT has said in a release.

At the end of 2013, FX reserves in Serbia’s central bank portfolio stood at EUR 11.2 billion, up by eight percent against the month earlier and by 2.5 percent against December 2012.

In contrast, FX reserves of commercial banks amounted to EUR 913 million, or down 12.5 percent against the month before and 13.7 percent against December last year.

NBS’ FX reserves grew predominantly as a result of undertaking new borrowing.

Nearly EUR 845 million came from issuing securities in foreign and domestic markets and about EUR 101 million net came from the foreign exchange the commercial banks' set aside on their mandatory FX deposits.

Additional EUR 21 million flowed into the central bank’s foreign exchange reserves through loans and grants.

In contrast, settling matured securities (EUR 99 million), settling obligations to foreign creditors (EUR 65 million), and repaying debt to the International Monetary Fund (EUR 58 million), made up the biggest outflow of foreign exchange.

IZIT states that obligations to foreign creditors are growing and further borrowing is unavoidable given that this year, at the time when implementation of radical economic reforms is imminent, EUR 1.2 billion is needed for interest payments alone.

The only way out is to obtain more favorable loan arrangements that would be used for early repayment of expensive loans so that the state and its economy can have more time to create a stimulating and competitive business environment and establish a sustainable positive trend and dynamics of industrial production and exports, IZIT said.