At its Seventh meeting of the Second regular session, on December 17th 2020, the National Assembly of the Republic of Serbia adopted the Law on establishing a guarantee scheme as a measure of economic support for mitigating the consequences of the COVID-19 pandemic caused by SARS-COV-2 virus, that enters into force on December 29th 2020.

This law extends the deadline for approving loans to companies secured by the guarantee of the Republic of Serbia for six months, ie until the middle of 2021, in order to continuously  support the economy and increase the liquidity of economic entities.

The Regulation on establishing a guarantee scheme as a measure of support to the economy for mitigating the consequences of the COVID-19 pandemic caused by the SARS-CoV-2 virus ("Official Gazette of RS", No. 57/2020), which preceded the adoption of this law, enabled commercial banks to approve up to two billion euros of favorable loans to the economy, by December 31st 2020. As the predicted amount will not be realized within the foreseen deadline, it was necessary to ensure the continuation of the predicted measures of support to the economy, as well as to fully use the funds provided for this purpose by the state, in cooperation with commercial banks.

In accordance with the guarantee scheme regulated by this law, the Republic of Serbia takes on the obligation to settle the claims of banks arising on the basis of loans approved by banks to finance liquidity and current assets, which are arising on the guarantee agreements concluded between the Republic of Serbia, the National bank of Serbia and banks.

The maximum amount of the guarantee at the level of the secured portfolio of each individual bank is EUR 480,000,000.  According to this law, as the user of the loan, secured by the guarantee from the guarantee scheme, is recognized:

  1. The user with a registered office in the Republic of Serbia, including agricultural holdings, registered with the Business Registers Agency and classified as an entrepreneur, or a micro, small and medium-sized company in accordance with the law governing accounting and classified as an entrepreneur, as well as another user that is not registered with the Agency for business registers, but has officially published financial statements and is classified as an entrepreneur, or micro, small and medium enterprise in accordance with the law governing accounting.
  2. Also, the user in accordance with the credit policy of the bank, to whom has been approved a new or renewal of an existing loan for which the Republic of Serbia may guarantee to the bank in accordance with this Law.

The Republic of Serbia can guarantee loans whose purpose is to finance liquidity and current assets. Loans cannot be used for refinancing and early repayment of overdue installments of existing loans in the bank's portfolio, nor for refinancing loans with other banks. The control of the implementation and supervision over the application of this law is performed by the Ministry of Finance, including the obligation that has been given to the commercial banks to duly report to the Ministry of Finance and the National Bank of Serbia on the implementation of the guarantee scheme.

For any additional questions, explanations and help, feel free to contact Tasić & Partners team at +381 11 6302233 or to reach us via e-mail office@tasiclaw.com