Early repayment of half of London Club debt

@Ian, UK, 30 April 2013 18:28 - the London debt is going to be paid off entirely in the near future, B92 reported recently.

Wouldn't you take a cash advance on a low-rate credit card to pay down one with a higher rate? Especially if you're going to be able to pay off the high-rate card in a few months (and not end up with two checks to write)? As long as Serbia isn't borrowing at a higher rate to eliminate the London Club debt for political reasons, I simply don't see the problem. Since they can't increase tax revenues simply by wishing, cutting the amount spent to service the debt is a sensible way to improve the bottom line.

Paying back loan debts to Party A using a loan (meaning taking on more debt) from Party B. Good business? I'm not convinced. Two smaller debts is better than one large debt at first, but two smaller debts can easily become two large debts once the interests starts piling up. Then there is all the other loans Serbia needs to pay back at some point, such as loans from the IMF and the World Bank. Is a short term gain worth a long term loss? I think not.

Interest payments could be a real mean thing for many countries who owe much money... a really really mean thing. Many countries end up struggling to just pay back the interest, and debt keeps rising. :/

Paying back loan debts to Party A using a loan (meaning taking on more debt) from Party B. Good business? I'm not convinced. Two smaller debts is better than one large debt at first, but two smaller debts can easily become two large debts once the interests starts piling up. Then there is all the other loans Serbia needs to pay back at some point, such as loans from the IMF and the World Bank. Is a short term gain worth a long term loss? I think not.

Interest payments could be a real mean thing for many countries who owe much money... a really really mean thing. Many countries end up struggling to just pay back the interest, and debt keeps rising. :/

@Ian, UK, 30 April 2013 18:28 - the London debt is going to be paid off entirely in the near future, B92 reported recently.

Wouldn't you take a cash advance on a low-rate credit card to pay down one with a higher rate? Especially if you're going to be able to pay off the high-rate card in a few months (and not end up with two checks to write)? As long as Serbia isn't borrowing at a higher rate to eliminate the London Club debt for political reasons, I simply don't see the problem. Since they can't increase tax revenues simply by wishing, cutting the amount spent to service the debt is a sensible way to improve the bottom line.