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REFORM AND GROWTH FACILITY FOR THE
WESTERN BALKANS
LOAN AGREEMENT
Between
THE EUROPEAN UNION
Represented by the European Commission
as Lender
AND
THE REPUBLIC OF SERBIA
as Borrower
and
THE NATIONAL BANK OF SERBIA
as Agent to the Borrower
2024 This Loan Agreement is made by and between the European Union, represented by the European Commission,
as the Lender,
and
The Republic of Serbia, represented by First Deputy Prime Minister and Minister of Finance,
as the Borrower,
and
the National Bank of Serbia, acting as an agent to the Borrower, represented by the Governor of the National Bank of Serbia,
herein jointly referred to as the “Parties” and each of them a “Party”.
PREAMBLE
Whereas:
(1) Regulation (EU) 2024/1449 of the European Parliament and of the Council (the ‘Regulation (EU) 2024/1449’), established the ‘Reform and Growth Facility for the Western Balkans’ (the ‘Facility’)1 to support the enlargement process by accelerating the alignment with the Union acquis, accelerate regional economic integration as well as socio-economic convergence with the EU.
(2) Support under the Facility is to be provided following the approval by the Commission, in accordance with Article 15 of Regulation (EU) 2024/1449, of a Reform Agenda submitted by the Borrower (the ‘Reform Agenda’), setting out the reforms to be undertaken by the beneficiary as well as investment areas. The Reform Agenda should provide for an overarching framework to achieve the objectives of the Facility, on the basis inter alia of a facility agreement and of a loan agreement to be concluded between the Union and the Borrower.
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(3) In accordance with Articles 11, 12 and 13 of Regulation (EU) 2024/1449 he Borrower prepared and submitted the Reform Agenda on 4 October 2024 the Commission. In accordance with Articles 14 and 15 of Regulation (EU) 2024/1449, the Commission assessed the relevance, comprehensiveness and
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Reform Agenda and approved it by means of an implementing decision 23 October 20242 (the ‘Commission Implementing
Decision’).
1 Regulation (EU) 2024/1449 of the European Parliament and of the Council of 14 May 2024 on establishing the Reform and Growth Facility for the Western Balkans, OJ L, 2024/1449, 24.5.2024, p. 1. 2 C(2024)7375, 23.10.2024.
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| satisfactory fulfilment of payment conditions (qualitative and quantitative |
(4) Regulation (EU) 2024/1449, by virtue of the Commission Commission approved a total maximum 1,131,090,929.77
steps) as set out in the Reform Agenda as well as of pre-conditions and general conditions for disbursement set out in Article 5 and 12 of Regulation (EU) 2024/1449 respectively.
(5) The loan support, which will be partially implemented through the Western Balkans Investment Framework (‘WBIF’), is to be disbursed directly to the treasury of the Borrower. The Borrower shall transfer 34,75% of the loan support to the European Western Balkans Joint Fund
(6) (EWBJF) established under the WBIF for receiving donors’ contributions in accordance with contribution arrangements to be concluded between the Borrower and European Bank for Reconstruction and Development and the European Investment Bank (the ‘Fund Managers’) pursuant to the rules pertaining to the fund (the ‘EWBJF General Conditions’).
(7) In accordance with Article 9 of Regulation (EU) 2024/1449, the European Union concluded a facility agreement (the ’Facility Agreement’) with the Borrower laying down the principles of the financial cooperation between the European Union and the beneficiary and setting out detailed provisions concerning, among other things, the activities related to the management, control, supervision, monitoring, evaluation, reporting and audit of the funds under the Facility as well as the measures to effectively prevent, detect, investigate, correct and report irregularities, fraud, corruption, and any other illegal activity affecting financial interests of the Union and conflicts of interests, including the effective investigation and prosecution of offences affecting the financial interests of the Union, and to avoid double funding.
(8) In accordance with Article 9(2) of Regulation (EU) 2024/1449, the Facility Agreement is to be complemented by a loan agreement setting out specific provisions for the management and implementation of funding provided to the Borrower in the form of loans under the Facility.
(9) In accordance with Article 9(3) of Regulation (EU) 2024/1449, funding is to be granted to the Borrower only after the respective Facility Agreement and the applicable loan agreement have entered into force.
(10) In accordance with Articles 12 and 21 of Regulation (EU) 2024/1449, the disbursement of the loan support is to be provided in instalments, based on the satisfactory fulfilment of payment conditions in the form of qualitative and quantitative steps set out in the Commission Implementing Decision and subject to the fulfilment of pre-conditions and general conditions set out in Article 5 and 12 of Regulation (EU) 2024/1449 respectively.
(11) In accordance with Article 21(11) of Regulation (EU) 2024/1449, disbursements of the loan are subject to the available funding, and an instalment may be disbursed in one or more tranches.
(12) In accordance with Article 20 of Regulation (EU) 2024/1449, the Western Balkans beneficiaries may request, following submission of their Reform Agenda, a pre-financing payment of up to 7% of the total amount foreseen under the Facility, subject to the fulfilment by the Western Balkans beneficiaries of pre-conditions and general conditions set out in Article 5 and 12 of Regulation (EU) 2024/1449 respectively. The pre-financing combines non-repayable financial support and loan support. The pre-financing corresponding to the loans is to be made available to the treasury of the Republic of Serbia.
(13) The Commission Implementing Decision establishes a total support in the form of loan support under the Facility amounting to a maximum of up to EUR 1,131,090,929.77 for the Borrower. In accordance with Article 20 of Regulation (EU) 2024/1449, the Borrower has requested a pre-financing amount of EUR 79,176,365.08 in the form of loan support.
(14) Pursuant to Article 9(4) of Regulation (EU) 2024/1449, the loan agreement to be concluded between the Commission and the Borrower is to provide for obligations of the Borrower in relation to the cooperation for the protection of the financial interests of the Union as set out in Article 129 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the
Union3 (the ‘Financial Regulation’).
(15) Provisions of the Financial Regulation relating to the implementation of financial assistance by the Lender are to apply to the Loan under this Agreement, unless derogated from in Regulation (EU) 2024/1449.
(16) The Commission's funding strategy (“Diversified Funding Strategy”), set out in Article 224 of the Financial Regulation and governed by the rules of Commission Implementing Decision (EU, Euratom) 2023/28254, as amended or replaced as the case may be, applies to the funding of the financial assistance in the form of loans provided under the Facility.
(17) The Commission will launch on behalf of the Union bond issues, notes, short- term bills or any other appropriate short and/or long-term financial transactions ("Funding Instruments") for the funding of the loan support requested by the Borrower.
(18) In accordance with recital 50 and Article 17 of Regulation (EU) 2024/1449, the Commission should offer loans at highly concessional terms with a maximum duration of 40 years, with repayment of the principal starting from 2034, in full compliance with the principles of sound financial management.
(19) The terms of each disbursement of the loan support are determined in accordance with Regulation (EU) 2024/1449, the Commission Implementing Decision, the Reform Agenda, the Cost Allocation Methodology, the Facility Agreement and this Loan Agreement.
(20) Appropriate measures related to the prevention of, and the fight against fraud, corruption and other irregularities affecting the Loan are to be provided for by the authorities of the Borrower.
3 OJ L 239, 26.9.2024. 4 Commission Implementing Decision (EU, Euratom) 2023/2825 of 12 December 2023
Now, therefore, the Parties hereto have agreed as follows: