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External Relations

Relations with London and Paris Club


After several years of negotiations with foreign commercial banks (2002-2004), a framework agreement with London Club creditors was signed on 7 July 2004 – “Memorandum of Understanding on Debt Restructuring under the NFA and TDFA between the Republic of Serbia and the International Coordinating Committee”, which envisages a write-off of approximately 62% of the debt, a repayment period of 20 years and a grace period of 5 years. The Memorandum was ratified on 24 July 2004.

Pursuant to the provisions of the framework agreement, in early April 2005, after the accompanying legal documents were signed, the debt of the Republic of Serbia was exchanged for approximately USD 1,020 million worth of bonds listed on the Luxembourg Stock Exchange.

Following the completion of legal and technical activities related to the exchange of the Republic of Serbia’s debt in respect of the remaining debt to London Club creditors, in late September 2005 an additional bond issue worth approximately USD 57 million was released under the same terms as the initial issue.

Bonds were issued in accordance with the Law on Debt Restructuring under the NFA and TDFA by Issuing Government Bonds of the Republic of Serbia, which envisages the total issue of government bonds in the amount of up to USD 1,080 million.

By signing the agreement with London Club creditors, the Republic of Serbia for the first time reached an agreement on the write-off of debt with this category of creditors and obtained a credit rating for bonds from S&P and Fitch (currently ‘BB-‘ and ‘B+‘).


The Agreed Minutes on the Consolidation of the FR Yugoslavia Debt to Paris Club Creditors was signed in Paris in December 2001. This document provided a basis for bilateral negotiations with each of the Paris Club member countries separately, which resulted in the signing of bilateral agreements with 17 countries (Denmark, Sweden, Spain, The Netherlands, Austria, Germany, Canada, Norway, Belgium, France, The United Kingdom, Switzerland, USA, Russian Federation, Finland, Japan and Italy).

The National Bank of Serbia, in cooperation with commercial banks, completed a complex procedure of debt reconciliation which preceded the conclusion of bilateral agreements.

The conclusion of the three-year Extended Fund Facility Arrangement with the International Monetary Fund in 2002 paved the way for the implementation of the first phase of debt write-off in the amount of 51%. The condition for the successful implementation of the second phase of debt write-off was met in February 2006 when, following the IMF’s positive assessment of the three-year Arrangement, the Secretariat of the Paris Club approved an additional 15% debt reduction for this category of creditors, effective as of 6 February 2006.

As the State Union of Serbia and Montenegro was dissolved in June 2006, the concluded bilateral agreements will have to be revised so that the Republic of Serbia and the Republic of Montenegro can regulate their obligations to Paris Club creditors on an individual basis.