Bloomberg News

Macedonia Accepts World Bank-Backed Citi-Deutsche Bank Loan

November 09, 2011

Nov. 9 (Bloomberg) -- Macedonia will accept a 130 million- euro ($177.3 million) loan from Deutsche Bank AG and Citibank, backed by a World Bank guarantee, to finance its 2012 budget gap.

The World Bank guarantee helped the former Yugoslav republic “obtain cheaper borrowing from commercial lenders,” Finance Ministry spokeswoman Ivana Bilbilovska said today, a day after the government asked lawmakers for approval.

Central bank Governor Dimitar Bogov said on Oct. 26 the government was likely to get 30 million euros from the World Bank and use the money as a guarantee for debt issuance of as much as 150 million euros.

Deutsche Bank and Citibank offered a loan “with a five- year maturity and an interest rate of 4.25 percent,” the ministry said in a statement on its website. The government will pay an additional 0.5 percent in fees to the World Bank for the guarantee, with a total cost of borrowing not exceeding 4.8 percent. Parliament has 30 days to approve the plan.

Macedonia, whose economy has been hurt by the debt crisis in Europe, plans a fiscal gap equivalent to $279 million, or 2.5 percent of GDP, according to its 2012 draft budget. It will rely on a 28 percent increase in capital spending and more investment in infrastructure to boost growth next year to 4.5 percent, up from 3.5 percent in 2011. Inflation should be 2.5 percent.

The Finance Ministry’s macroeconomic forecasts show the country expects an increase in foreign direct investment inflows next year to 480 million euros, from 370 million euros this year. That will be sufficient to finance an expected current- account gap of 464 million euros.

--Editors: Douglas Lytle, Alan Crosby

To contact the reporter on this story: Gordana Filipovic in Belgrade at

To contact the editor responsible for this story: James M. Gomez at

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