New loan for old debts. 110 million euros, for which entity in Bosnia and Herzegovina (BiH), Republika Srpska (RS) borrows from Hungary will be intended for repayment of old debts.
“The signing of the contract will enable the smooth execution of all obligations and the realization of the planned policy of the Government of the RS,” the RS Ministry of Finance told Radio Free Europe (RSE).
Namely, the money is taken from the Export-Import Bank of Hungary (EXIM).
EXIM Bank is 100% state-owned, and as their website states, they are the country’s “official export credit agency”.
According to their classification of countries by risk for investment, on a scale of 1 to 7, BiH has a score of 5, at the level of Montenegro, Kosovo and Moldova. The only European countries with a worse rating are Russia (6), and Belarus and Ukraine (7).
“Thanks to the activities of the President of the RS, Mr. Milorad Dodik, Hungary has expressed interest in financing, and the Ministry of Finance of the RS has entered into negotiations with the relevant institutions,” the answer to RSE states.
There was no answer to RSE’s question whether the Minister of Finance, Zora Vidovic, signed the loan agreement, since the Decision states that the Minister is authorized to do so.
The repayment period is 10 years, the fixed interest rate is five percent, and the default interest rate is two percent. A one-year payment delay is also planned, the so-called “grace” period.
What kind of bank is it?
As explained by Balint Szalai, journalist of the Hungarian RSE service, EXIM Bank is a “captive financial institution” according to the interpretation of the European Union (EU), which means that it cannot act independently of the authorities, and as such is part of the state.
“Its mission is, on paper, to help Hungarian companies strengthen their export opportunities with cheap loans. In reality, it finances a wide variety of affairs, and a large part of them is only politically motivated and has nothing to do with exports,” Salaj told.
Why debt with Hungarians?
The Ministry of Finance did not provide additional clarifications except that Hungary “expressed interest in financing” thanks to Dodik.
The former finance minister of the RS, Svetlana Cenic, told that RS will feel the full cost of this loan in the future because it is not known what Dodik promised Orban in exchange for the money, RSE reports.
E.Dz.
