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The Draft Law on the Development Bank of Serbia has finally entered parliamentary procedure, as prepared by the Ministry of Finance, i.e. the Government of the Republic of Serbia. Expert assistance was provided by KfW, a German development bank, and approval was given by the International Monetary Fund with regard to the budgetary expenditure related to the establishment of the Development Bank of Serbia (DBS).
The Law provides for the establishment of the DBS with initial capital of EUR 400 million, which will be successively paid in from 2013 to 2015. DBS’s shares will be wholly owned by the Republic of Serbia, with the possibility for them to be acquired by development financial institutions (DFIs) the majority of which are owned by states and international financial institutions (IFIs), once prior approval has been obtained from the Government.
It is envisaged that the DBS will approve loans, issue guarantees, invest in securities and conclude insurance and reinsurance agreements (which could be seconded to a subsidiary established for such a purposes), and will finance predominantly small to medium enterprises, export development, local and communal infrastructure, energy efficiency, renewable energy sources and environmental protection. Financing will be carried out through commercial banks, with the exceptional possibility of direct financing.
Institutionally, the bodies of the DBS are to be the management board and the executive board. An advisory board, in charge of appointing the members of the executive board, will consist of the Minister of Finance and the Ministry of Economy acting in their ministerial capacity. A third member will be chosen from the ministries in charge of transport, environment, trade, regional development and science matters. In addition, upon the establishment of the DBS, the Agency for Export Insurance and Financing as well as the Unit for the Management of the Revolving Credit Facilities Fund of the Republic of Serbia will both cease to exist. Finally, DBS will take over some of the assets, rights and obligations of the Development Fund of the Republic of Serbia, in accordance with the decision of the Government and the recommendations of an external auditor. The remaining assets, rights and obligations will be managed by the Deposit Insurance Agency, and the Development Fund itself will cease to operate.
Bearing in mind the number of interesting solutions presented under this draft law, ranging from ownership matters, through to its business plan, and its institutional solutions, it could not be disputed that the functioning of the DBS will have important consequences for the Serbian economy by 2015. On the other hand, its internal organization and the approach taken to the appointment of its bodies will be very a important subject in the domain of politics and the economy this election year.