Failure to adopt a budget amendment that would enable the refinancing of old debts with high interest rates will make it difficult for the Government to negotiate with European partners, as it was planned to finish this work before the first installments of the Chinese dollar loan for the highway are due at the beginning of July, they learned. "News".
Thus, the maximum effect and future savings for the state would be achieved due to the expected lower interest rates and the new grace period. Now the question is when the Assembly will meet again due to the boycott of the largest ruling club, the Democratic Front, while it is positive that there is interest and desire from the European Union to help Montenegro get rid of the risk of this loan, which the former government agreed six years ago. For better refinancing conditions, it is also important that the Government receives positive evaluations from international financial institutions.
The amendment provided for debt refinancing of up to EUR 900 million. So far, about 680 million euros have been withdrawn from the Eksim Bank loan for the highway, while there are still about 100 million undrawn money left for completion, plus interest, the amount of which will depend on the refinancing.
DF deputies announced at the economy committee that they would not support this amendment, due to the conflict with the prime minister at the plenum the previous day. After that, Finance Minister Milojko Spajić withdrew the proposal.
Economist Zarija Pejović said that based on what was presented by the Ministry in the media, it can be concluded that the financial institution from the West will refinance the loan with the Chinese Exim bank and thereby "close" the debt that Montenegro has towards this bank.
"If this premise is true, it means that Montenegro will have an exposure in euros to the financial institution that refinances the debt, which makes it impossible to increase the debt due to the possible growth of the dollar against the euro, which would be a risk in the case of dollar exposure to Exim Bank. The currency risk has already been realized in a negative direction, compared to the exchange rate at the time of the conclusion of the contract, which increases the total indebtedness. Also, the interest rate is lower, which reduces interest expenses, which means direct savings for the state budget. In addition, another 6-year grace period was offered, which enables the accumulation of funds from toll collection, for future loan repayment. We can only hope that the highway will be completed by the end of the year," Pejović said.
He also says that the question arises as to whether the Chinese bank will accept refinancing and under what conditions, since debt repayment is not only principal, but also interest expenses.
"If the loan is refinanced, does this mean that the Chinese bank is giving up interest income in the future? That is, whether the Chinese bank will demand the payment of a "penalty" due to the early repayment of the loan, which will increase the debt," said Pejović.
After the Parliament adopted the budget, Spajić said that it "could have been in even greater interest for the citizens, if the economic logic to support the amendment on refinancing had been in force".
He said at the economy committee that the interest on the refinanced amount of the loan will be one percent instead of the current two percent.
"The term will be 20 years, and the first six years will be a grace period. If they were to use the current option, the repayment would start this July, and we do not have the highway built yet," Spajić said.
SD MP Damir Šehović said that if the Government negotiates the above, he and the entire Assembly will support such a proposal.
SDP MP Raško Konjević said that the government does not have the legitimacy of the parliament and that it is trying to do something that is not correct. Spajić reminded that Konjević had previously announced his support to the Government if it found a way to refinance a more favorable loan. Konjević replied that the Government will receive support when it agrees on such an arrangement.
The Democrat MP, Zdenka Popović, appealed to the parliamentary majority to think carefully, because it is about debt with the aim of refinancing previous debts and returning the huge interest of 110 million euros. She reminded, as she said, a colleague from the opposition who was part of the government until last year, that then the state got into debt by issuing Eurobonds and that was declared a secret document.
The representative of the Black and White coalition, Miloš Konatar, said that this amount is used for refinancing the debt as indicated, which is why there is no need to talk about the fact that it is not known what these funds would be spent on. The President of the Board, Vladan Joković (SNP), said that he was in favor of borrowing on more favorable terms, but that clarifications were necessary.
There are many old expensive loans that need to be refinanced
Legal adviser at the NGO Action for Social Justice Ines Mrdović called the refusal of part of the parliamentary majority to support this amendment a shocking decision, because of which citizens will continue to pay enormous interest rates on inherited loans from the former Yugoslavia, which will result in less money for social and other needs in the country.
"We are talking about several earlier loans, some of them are from the time of the former Yugoslavia, and among the most unfavorable are those concerning the Paris Club of Creditors," said Mrdović.
110 million euros were previously received from this club, so far 111,8 million of principal and interest have been returned, while another 64 million remains to be paid.
"If there was a possibility to reduce the obligations for enormous interest expenses through refinancing, then the people's representatives (both the government and the opposition) had to take care of this and take care of the public interest, and not act directly to the detriment of all the citizens of this country, who, here, for more than three decades, the easiest "coin to change". It should also be pointed out that the worthiness of the parliamentary function predominantly includes making decisions in favor of the citizens, and that all other aspects of that function "fall into the water" in front of the public interest, according to Mrdović.
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