World Bank approves USD 388mn loan

The World Bank’s board of directors has approved a loan of USD 388mn to Serbia to finance Corridor 10, in what is the bank’s biggest loan to Belgrade so far. The World Bank stressed that double technical quality controls would be introduced to ensure that the money was spent on precisely what it was intended for. B92 understands that government and World Bank officials will meet on Monday to formally sign the loan deal. World Bank approves USD 388mn loan The USD 388mn is planned to finance three sections of Pan-European Corridor 10. According to a World Bank statement, the project consists of four components: construction of two sections totaling 31.6 km of the M1 highway towards Macedonia, along the Grabovnica-Grdelica-Vladicin Han-Donji Neredovci route; a section of the M1 towards Bulgaria, from Nis to Dimitrovgrad; and almost nine kilometers of highway around Dimitrovgrad. Economist Milan Kovacevic says that the loan for the continued construction of Corridor 10 is of primary importance. He says the new loan will beef up the hard currency balance and create new jobs. However, he says that is only one side of the coin, as it will also increase Serbia’s foreign debt. “When you add up the entire debt, it turns out that our debt will rise to close to 80 percent GDP, which will lead to big problems in future. Public spending will rise to that end, new obligations will be created,” said Kovacevic. “The problem is that the euro’s value will also fall as a result, which will hamper our exports, and lead to our problems being accentuated rather than eased,” he said. The loan agreement with the World Bank also foresees a “road safety” component, the statement says. Besides this loan, which is the first loan for Corridor 10, a further EUR 600mn loan is expected from the European Investment Bank and the European Bank for Reconstruction and Development. That money will be diverted to work on two sections of the highway—from Nis to Pirot and Nis to Vranje.

World Bank approves USD 388mn loan

The USD 388mn is planned to finance three sections of Pan-European Corridor 10.

According to a World Bank statement, the project consists of four components: construction of two sections totaling 31.6 km of the M1 highway towards Macedonia, along the Grabovnica-Grdelica-Vladičin Han-Donji Neredovci route; a section of the M1 towards Bulgaria, from Niš to Dimitrovgrad; and almost nine kilometers of highway around Dimitrovgrad.

Economist Milan Kovačević says that the loan for the continued construction of Corridor 10 is of primary importance.

He says the new loan will beef up the hard currency balance and create new jobs.

However, he says that is only one side of the coin, as it will also increase Serbia’s foreign debt.

“When you add up the entire debt, it turns out that our debt will rise to close to 80 percent GDP, which will lead to big problems in future. Public spending will rise to that end, new obligations will be created,” said Kovačević.

“The problem is that the euro’s value will also fall as a result, which will hamper our exports, and lead to our problems being accentuated rather than eased,” he said.

The loan agreement with the World Bank also foresees a “road safety” component, the statement says.

Besides this loan, which is the first loan for Corridor 10, a further EUR 600mn loan is expected from the European Investment Bank and the European Bank for Reconstruction and Development.

That money will be diverted to work on two sections of the highway—from Niš to Pirot and Niš to Vranje.