Serbia

Serbia
EBRD country factsheet
As at 1 January 2007, the European Bank for
Reconstruction and Development (EBRD) had
signed 69 projects in Serbia, totalling over
€1 billion. This has helped to generate an
additional €1.28 billion from other sources. A
total of 47 per cent of investments are in the
private sector.
E u r o p e
Highlights
The EBRD’s activities have increased significantly over recent years, reaching
just over €1 billion by the end of December 2006 (in 2006 new commitments
reached €327 million). Initially, energy and other infrastructure projects
dominated the Bank’s portfolio, but the Bank is shifting its focus to projects
in the private sector.
EBRD commitments to financial institutions increased to €256 million and
included loans or equity investments in Komercijalna Bank, ProCredit Bank,
Volksbank, Opportunity Bank, Société Générale, Zentrallbank Östereich
Raiffeisen, HVB, Metals Banka and Cacanska Banka. One exit, Eksim Bank, was
successfully achieved. Several transactions in the financial sector supported
local banks through mortgage financing.
In 2006, the EBRD committed €110 million to infrastructure projects, including
a €60 million loan to Serbian Railways for the procurement of new freight
wagons in order to meet booming demand. The Bank also committed €49.6
million to the City of Belgrade for the new Sava river bridge.
In the corporate sector (agribusiness, manufacturing, property/tourism and
telecoms), the EBRD increased its portfolio to €209 million with a strong focus
on local agribusiness. Projects included a loan to Sevojno Copper Rolling Mill,
the first post-privatisation restructuring project; a second loan to Hemofarm for
a new plant in Russia; and a loan to Ball Packaging for an aluminium can facility
– the biggest greenfield investment in the country.
Latest news
EBRD supports Serbian confectionary maker
€10 million to Soko Štark supports regional cooperation
The EBRD is lending Soko Štark, the leading Serbian confectionery producer, up
to €10 million to support its modernization programme to upgrade and renew
its machinery, as well as to develop new products and further support its brand
and market development.
Soko Štark’s performance and sales have in the past been affected by lack of
investment. In 2005 Grand Kafa, a local company majority-owned by Slovenia’s
largest food and beverage company, Droga Kolinska, became the majority
shareholder. Soko Štark has made, and intends to make significant additional
investments to support restructuring, which, with EBRD investment, will be
>>last page
further extended.
EBRD commitments by year
€ million
350
300
250
200
150
100
50
0
02
03
04
05
06
Projects included a loan to
Sevojno Copper Rolling Mill,
the first post-privatisation
restructuring project.
Growth remains strong and inflation has returned to singledigit levels on the back of very tight monetary policies.
Background information
Economic focus
Basic facts
Performance and prospects
Population (in millions)
Growth remains strong and inflation has returned to singledigit levels on the back of very tight monetary policies,
but high public expenditure and the large current account
deficit need to be addressed to ensure further development
of the private sector.
Area (‘000 sq. km)
55 per cent
National currency
´ Average, transition countries
n Serbia
110
100
90
80
70
60
50
40
30
20
10
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
Transition indicators, 2006
n Serbia
Servicing of the external public debt will continue to be
a challenge over the next few years, with debt service
requirements for 2006 estimated at almost US$ 2 billion,
and expected to rise further in the coming years, compared
to less than US$ 1 billion two years ago.
4.5
Outlook and risks
1.5
´ Maximum, transition countries ´ Minimum, transition countries
4.0
3.5
3.0
2.5
2.0
1.0
0.5
Infrastructure
reform
Non-bank
financial
institutions
Banking
reform
Competition
policy
Trade and
forex system
Price
liberalisation
Enterprise
restructuring
0.0
Large-scale
privatisation
The Serbian economy has strong growth potential, but
the risks that this potential will not be realised are high in
the short term. The main risks are that unresolved issues
about the country’s future, notably concerning the status
of Kosovo, will distract attention from urgent economic
reforms and progress towards EU integration and, if
tensions were to escalate, could deter foreign investment.
A key short-term macroeconomic risk is that credit to the
private sector could be squeezed by a combination of high
public investment and spending and the ongoing efforts by
the central bank to dampen inflation.
Dinar
Real GDP (1989 = 100)
1992
Strong export growth and continued high inflows of
transfers have helped to keep a lid on the current account
balance in 2006, although a surge in imports has led to
a deficit of around 17 per cent of GDP. Flows of inward
foreign investment remain very strong and are estimated
to be in excess of €3 billion in 2006, about half of which is
accounted for by the sale of Mobi63 to Telenor of Norway.
The country’s overall debt levels are moderate, but private
debt is rising rapidly.
Private sector share in GDP (2006)
1991
External sector
na
Small-scale
privatisation
Several industries that have benefited in recent years from
substantial foreign investment, such as tobacco and base
metals, are growing particularly strongly. Service growth
is particularly rapid at close to 30 per cent, while the
relatively mild winter weather contributed to construction
sector growth of about 35 per cent.
Serbian
GDP per capita in 2006 at current
international US$
1990
The Serbian economy has grown strongly over the past
couple of years. Real growth in 2006 was around5.7 per
cent and growth has accelerated again in the the first
quarter of 2007, according to preliminary figures.
102
Official language
1989
Real economy
10
The transition indicators range from 1 to 4+, with 1 representing little or no change
from a rigid centrally planned economy and 4+ representing the standards of an
industrialised market economy.
For more information
Visit the EBRD at: www.ebrd.com/economics
Particular attention will continue to be paid to the
agribusiness, natural resources and property sectors.
EBRD strategy
Operational priorities
Key dates
Private corporate
Latest strategy
The EBRD aims to increase its operations with local
private corporate clients, and promote their investments
in new technology and environmental improvements. The
privatisation process and post-privatisation restructuring
will be supported.
Next strategy
2009
Joined EBRD
January 2001
Financing of greenfield investments with foreign strategic
investors will continue. Particular attention will continue to
be paid to the agribusiness, natural resources and property
sectors.
February 2007
EBRD commitments by sector
As at end of 2006
Energy
Natural resources, Power
and energy
Financial sector
Banking sector, Equity funds,
Trade finance, Non-bank FI
Infrastructure
Corporate sector
The Bank will, in cooperation with the EIB, the EU and the
World Bank, continue lending for key infrastructure projects
where a clear transition impact can be achieved. Priority
will be given to projects with a strong regional dimension.
The Bank will support corporate restructuring in the
electricity, gas and oil, road and railway sectors. Additional
support will also be provided to developing the roads
network given Serbia’s strategic location on the PanEuropean Corridor X and urgent need to alleviate transit
traffic away from the centre of Belgrade, which will
achieved with the completion of the bypass. The Bank will
advance commercial financing to municipalities.
Agribusiness, Manufacturing,
Property/Tourism, Telecoms
Infrastructure
Municipal and environmental
infrastructure, Transport
Micro and small
business financing
Hungary
Subotica
Croatia
Financial sector
The EBRD will increasingly look for opportunities to support
the rapidly emerging non-bank FI sector, in particular
insurance, leasing and pension funds. It will also look
for opportunities to further consolidate and increase the
market share of strong commercial banks, as well as
continuing its support to micro-lending institutions.
The level of private sector lending in the Bank’s portfolio
remains at a relatively low level because of large
commitments to public sector infrastructure projects but is
expected to increase significantly over the coming period.
Scale (km)
Novi Sad
Belgrade
Bosnia &
Herzegovina
0
Romania
Smederevo
Valjevo
Kragujevac
Krusevac
Montenegro
Nis
Kosovo
Pristina
Adriatic
Sea
100
Albania
FYR Macedonia
n EBRD office
For more information
Visit the EBRD at: www.ebrd.com/serbia
Bulgaria
Gilles Mettetal, EBRD Director for Agribusiness, said this deal will help
continue the transformation of this company that has a long tradition in the
region to build on its success as a leading sweet and savoury producer in
Serbia. The loan also reflects the EBRD’s strategy of supporting projects that
have a regional dimension and that demonstrate the benefits of cross-border
investment, said Mr Mettetal.
cont.>>
Contacts
Belgrade Resident Office
Established in 1922 as the leading confectionary producer in Serbia, Soko
Štark employs 1,419 staff at its offices in Belgrade. Its main products include
sweets, biscuits and savoury products. Droga Kolinska Group is a global
company that sells leading brands such as Argeta, Grand Kafa, Donat, Cockta
Barcaffe, Bebi, Maestro and Zlato Polje world-wide.
Droga Kolinska Group has been successfully implementing a strategy to grow
internationally by investing in acquired companies in Serbia, such as Grand
Prom and Soko Štark, and completing investments in its Greenfield factory in
Bosnia and Herzegovina.
These investments, together with the EBRD’s support, are crucial to helping
Droga Kolinska Group achieve its goal of becoming the largest food company in
the region, said Robert Ferko, CEO of Droga Kolinska. In the first nine months of
2006 the Group’s sales reached €240 million, with a net profit of €13.5 million.
The current performances of Grand Prom and Soko Štark also indicate that their
sales and net profit targets in 2006 will be met, both of which are significant
also for increasing the sales of other Droga Kolinska brands in Serbia.
This deal is important as it supports the restructuring and immediate
modernisation of the leading Serbian confectionery producer following its
privatisation, said Dragica Pilipovic-Chaffey, EBRD Director for Serbia. It further
demonstrates the opportunities available to other strategic investors who want
to develop their business.
Selected projects signed by the EBRD in 2006
Project name
Description
Sector
Serbian Railways
rolling stock
Purchase of freight wagons to increase
efficiency.
Transport
Sava river crossing
Construction of a bridge to relieve traffic Municipal
congestion, noise and traffic-related air infrastructure
pollution.
Portfolio
class
Total
Project
EBRD
value
finance (€ million)
(€ million)
Bulevar Dr Zorana Djindjica 64A,
5th Floor
11070 Novi Beograd
Serbia
Tel: +381 11 212 0529
+381 11 212 0530
+381 11 212 0531
Fax: +381 11 212 0534
Country Director: Hildegard Gacek
(from 1 July 2007)
Headquarters
EBRD
One Exchange Square
London EC2A 2JN
Tel:
+44 20 7338 6000
Fax:
+44 20 7338 6100
Business Group Director
Peter Reiniger
BGD CE, West Balkans and
Telecom
Tel:
+44 20 7338 6668
Fax:
+44 20 7338 7588
New business enquiries
Business Development Unit
Tel: +44 20 7338 7168
Fax: +44 20 7338 7848
E-mail: [email protected]
Existing project enquiries
Project Enquiries
Tel: +44 20 7338 6282
Fax: +44 20 7338 7848
Email: [email protected]
State
60.0
161.6
Private
49.6
161.2
Komercijalna Banka Equity investment for improving facilities Bank equity
Beograd preincluding IT and staff training, leading to
privatisation
full privatisation.
Private
70.0
70.0
JKR Resource
Equity investment in a company in the
Manufacturing
river aggregates and roads maintenance
sectors.
Private
30.2
30.2
Soko Štark
Loan to a leading confectionery company Agribusiness
for modernisation and restructuring.
Private
10.0
26.5
Tel: +44 20 7338 7356
Fax: +44 20 7338 7742
Email: [email protected]
Somboled
Modernisation and development of a
dairy company.
Agribusiness
Private
10.0
25.6
Publications
GTC Residential,
Belgrade
Construction of around 200 residential
units aimed at Serbia’s growing middleclass.
Property and
tourism
Private
8.2
22.3
Cacanska Banka
Equity investment to fund continued
growth and as a first step towards full
privatisation.
Bank equity
Private
15.0
15.0
HVB Group Debt
Facility Framework
Credit lines provided to BACA-HVB
Bank lending
Banka Srbija i Crna Gora (Mortgage Loan
II and III) for on-lending as long-term
mortgage loans.
Private
15.0
15.0
TurnAround Management and
Business Advisory Services
Tel: +44 20 7338 7553
Fax:
+44 20 7338 6102
Email: [email protected]
www.ebrd.com