Belgrade, Serbia, May 18, 2015 –
IFC, a member of the World Bank Group, and the Serbian Ministry of Economy, in partnership with the Government of Switzerland represented by the Swiss State Secretariat for Economic Affairs (SECO), have launched a program to improve Serbia’s insolvency system, reducing risk and boosting lending.
By late 2014, the share of non-performing loans (NPLs) in Serbian bank portfolios had reached 23 percent, up from 16.7 percent in 2010. This has undermined bank earnings, capitalization, and ability to extend new loans. The IFC program is expected to reduce lending risks and encourage further bank lending.
“The expected result of the program is to make the debt resolution system in Serbia more efficient by improving the insolvency frameworks and practices, which will mean stronger NPL prevention and resolution as well as increased returns to creditors and greater protection for economically viable companies,” said Zeljko Sertic, Serbian Minister of Economy.
The project will be implemented in cooperation with the ministries of economy and justice, along with the Serbian Chamber of Commerce and Industry.
“IFC’s Debt Resolution program will be implemented over the next three years, covering legal and regulatory reform and improving the capacities of relevant institutions in Serbia to deal with debt resolution,” said Thomas Lubeck, IFC’s Regional Manager for the Western Balkans.
Many observers view the insolvency proceedings envisaged by current laws as too complex and burdensome. For instance, it takes 635 days to enforce a contract, following 36 procedures, and two years to resolve insolvency, according to the latest World Bank Group’s Doing Business report.
“At the end of this program, we expect to have an improved business environment, better legal and regulatory insolvency frameworks, and stronger financial and private sectors,” said the Swiss Ambassador in Serbia, H.E. Jean-Daniel Ruch.
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, we use our capital, expertise, and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, we provided more than $22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development. For more information, visit
www.ifc.org
.
About SECO
The State Secretariat for Economic Affairs (SECO) is the Swiss Confederation’s competence center for all issues related to economic policy, including economic development and cooperation. SECO has supported and funded economic development programs and projects in Serbia since the early nineties. For more information please visit:
http://www.swiss-cooperation.admin.ch/serbia
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