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Signing of the Agreement on Debt Rescheduling with the Republic of Italy

Published date: 08.03.2007 10:49 | Author: DRŽAVNI DUG

Ispis Print


The Agreement on Debt Reduction and Rescheduling between the Government of the Republic of Italy on one hand and the Governments of the Republic of Montenegro and Serbia on the other was signed on 4 December 2006 for the purpose of implementation of the Negotiated Minutes on Debt Consolidation of the Federal Republic of Yugoslavia, which was signed on 28 December 2001 with the Government representatives of the Paris Club creditor countries. The Negotiated Minutes define main principles, conditions and recommendations for ex FRY debt write-off, while bilateral agreements between the creditor countries and FRY determine concrete liabilities towards a country creditor and manner of debt settlement. In the framework of the Paris Club creditors, Serbia and Montenegro debt was rescheduled and written-off according to Naples terms i.e. 66%.
Agreement with Italy, except for Agreement with Japan or Japanese Bank for International Co-operation (JBIC), has been the only bilateral agreement which was not signed with the Paris Club creditor countries. However, based on the recommendations from the Paris Club Secretariat, Montenegro is likely to sign bilateral agreements with all Paris Club creditor countries as an independent state. Signing of the bilateral agreements will not affect total amount of debt and regular repayment of agreed liabilities.
Agreement with Italy covers the debt to the Italian Export Credit Agency SACE and Artigiancassa SpA, ODA Manager on behalf of the Republic of Italy.
Total liabilities of Montenegro to the SACE, following 66% write-off and according to debtors list, amount 4.670.563,82 EUR and 3.291.871,86 US$. On 22 March 2002, Montenegrin debt in EUR to the SACE amounted 13.736.508 EUR (debt was originally denominated in Italian liras and DEM), and following the first write-off of 51%, it amounted 6.730.888,92 EUR, so that total write-off amounted 9.065.944,81 EUR. On 22 March 2002, Montenegrin debt in US$ to the SACE amounted 9.681.662,83US$, and following the first write-off it amounted 4.744.014,79 US$, so that total write-off amounted 6.389.790,97 USD. According to the determined depreciation plan, debt repayment starts in 2008 and concludes in 2024. Interest rate is determined at the level of six-month EURIBOR for debt in EUR and six-month LIBOR for debt in US$, increased by 0,50% margin at annual level.
With regard to ODA loans, a depreciation plan or related liabilities to the Artigiancassa have been determined, which are repaid in total amount of principal starting from 22 September 2018 and concluding on 22 March 2041. Total amount of Serbia and Montenegro debt to the Artigiancassa amounted 23.728.598,15 EUR and 4.743.777,72 USD. After distribution of debt and signing of debtors list, Montenegro liabilities to the Artigiancassa amount 6.573.906,70 EUR and 3.585.587,58 USD. It should be noted that agreed amount of 66% is not written off with regard to debt rescheduling under ODA loans, but new terms and conditions are agreed such as repayment period, grace period and interest rate. Under the Agreement with Italy, grace period is 8 years (starting from 2008), repayment period is 25 years with fixed interest rate of 1.75%.
The Ministry of Finance data concerning the debt to Italy have been kept without calculation of interest and default interest, so that debt rescheduling with Italy will not significantly affect the total amount of Montenegrin debt to the Paris Club creditor countries.

Coordinator, Debt Management Department
Nemanja Pavličić