Siniša Mali, interview for Bloomberg
Serbia plans to tap international bond markets to pay for projects designed to double its economic growth rate under a new economic plan as the country exits years of austerity, according to Finance Minister Sinise Mali.
The government sees annual growth climbing to 7% within three years from about 3.5% now, Mali said in an interview Wednesday. That is largely dependent on at least 10 billion euros ($11 billion) in infrastructure projects included in the new five-year economic plan as Serbia emerges from years of International Monetary Fund-imposed austerity.
“Growth rates are our key challenge,” Mali said.
Since his appointment in May 2018, Mali has been an outspoken proponent of increasing public and private spending to take advantage of record-low borrowing costs. The government plans to raise 2 billion euros from global bond sales and 312 billion dinars ($2.7 billion) in the domestic market next year, down slightly from this year’s program.
Most of the infrastructure spending in the next five years will be raised on international capital markets, including a maiden green bond, according to Mali.
“Considering that our latest Eurobond came with a 1.25% yield, I think conditions are such that we should borrow in the market,” Mali said. Separately, the ministry is exploring a debt sale in China, he said.
At least 1 billion euros of spending will target pollution, which will “create the right opportunity for the first green bond issuance, allowing us to show our commitment and readiness to resolve environmental issues,” Mali said. Serbia’s post-Communist environmental cleanup is one of the costliest requirements on its path to European Union membership.
Serbia’s local currency debt is likely to enter one of the JPMorgan emerging-market indexes in the first half, after being placed on a watch-list in the first quarter, he said.
Bond sales with longer maturities and increased secondary trading will help Serbia qualify for Euroclear, another step that could push demand up and costs down, Mali said. Serbia plans to offer dinar-denominated bonds with a maturity of 12 years and 20-year Euro-denominated securities in the first quarter.