The debt of Serbia’s public transport company GSP to be converted in dinars

BusinessSouth-East European INDUSTRIAL Мarket - issue 3/2017

The European Bank for Reconstruction and Development (EBRD) announced it was converting the EUR 15 million debt owed by the Belgrade Transport Company GSP into local currency, Serbian dinars.

This action aims to mitigate the foreign exchange risk for GSP, EBRD clarified. The measure also promotes local currency lending, which is an important ongoing strategy both for the Serbian government and the central bank.

The debt in question is part of a EUR 65 million loan, which the EBRD provided the public to the transport in 2013 to support the modernization of the bus fleet and the restructuring of its operations.

The investment was used for the purchase of 200 low-floor 18-metre articulated buses which were put into operation in 2014. GSP also obtained 12 school midibuses to transport school children, starting in September 2017.

"The EBRD is at the forefront of efforts to develop local currency and local capital markets in countries where it invests. This is our first such transaction in Serbia and it is an innovative way of supporting a long-standing client and contributing to the country’s macroeconomic and financial stability", Daniel Berg, the EBRD Director for Serbia, stated.

Berg also clarified that the EBRD is continuing its policy advisory work with GSP, which is designed to improve the company’s operational and financial performance."Our long-term objective is to help develop a well-managed company which provides high quality services but with much less need for ongoing budgetary support, he disclosed.

"At GSP, our revenues are in dinars and repaying the EBRD loan in the same currency will help us avoid being exposed to the fluctuations of the exchange rate.

It will have a positive impact on the company’s financial health and operational efficiency and will help further improve services for the benefit of Belgrade residents", Zeljko Milkovic, General Manager of GSP, stated further.

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