Serbian SOEs in restructuring owe state EUR 1.5 bln – World Bank

Serbian state-owned enterprises (SOE) undergoing restructuring currently owe EUR 1.5 bln to state creditors, according to Dusko Vasiljevic, a World Bank official, Tanjug newswire reported April 15.

“The EUR 1.5 bln applies to debt in unpaid taxes and contributions to the tax administration, debts to the Development Fund and debts to public companies for overdue bills for electricity, gas, water and public utility services,” said Vasiljevic, as cited by the news wire.

Vasiljevic also stated that the 153 SOEs presently undergoing restructuring should not be expected to go bankrupt as early as in May, since bankruptcy is not an automatic process.

“In some of these companies, the state is the biggest creditor, so the decisions to initiate bankruptcy proceedings can be postponed for political reasons,” said Vasiljevic, cited by Tanjug. “However, nearly all of those companies have commercial creditors who the government cannot put pressure on; so there is always a risk of bankruptcy proceedings being initiated somehow beyond the state’s control. For that reason the government must ensure that employees get their redundancy payments before the companies go bankrupt.”

When asked what solution the World Bank would be most pleased with, Vasiljevic answered that the  best solution would be to properly assess whether the companies have any chance of becoming profitable, and then to attempt further privatizations. Those companies with no hope of profitability should enter ordered bankruptcy, to guarantee redundancy payments.

“At the same time, the state must introduce labor policy measures to provide employment to some of the employees who would lose their jobs,” added Vasiljevic.

If the World Bank finds the macroeconomic situation in Serbia satisfactory, the state could count on obtaining a USD 250 mln loan from the bank as early as in June or July this year. The main condition for the loan is that the companies are properly restructured, with an ordered resolution of debts and redundancy payments for employees. If there is a need for additional adjustments to the state budget, the loan could realistically become available in September 2014.

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