BELGRADE- Serbia and the Belgium-based Euroclear signed an agreement on Monday to make the Balkan country's local debt 'euroclearable,' or clearable through the Euroclear international settlements system, which would help lure foreign portfolio investments.
Euroclear specialises in the settlement and safe-keeping of domestic and cross-border securities for bonds, equities and derivatives. Access to such an international settlement system can attract more foreign capital to a market and lower bond yields.
Finance Minister Sinisa Mali said the Euroclear membership was vital for the future sales of European Union candidate countries' bonds.
"We expect the Central Registry to become a participant in Euroclear during the summer and to ... make the first auction of government securities, denominated in local currency, in January 2023," he said in Belgrade after the signing ceremony.
Mali said Serbia's membership in Euroclear would bolster development and liquidity of the domestic money and capital markets and lower financing costs. It would also lure more foreign portfolio investors, he said.
Debt sales would depend on the outcome of the April general elections, in which the ruling coalition led by the Progressive Party of President Aleksandar Vucic would face several opposition alliances.
Last September, S&P Global Ratings and Fitch affirmed Serbia's ratings at BB+ - one notch below investment grade.
Serbia's total public debt stood at around 57% in November. In its spending plan for 2022, it envisioned a deficit of 3% of economic output to be covered by borrowing at home and abroad.
Belgrade also earmarked 7.3% of economic output in 2022 for spending, mainly on capital infrastructure investments, as the country emerges from the COVID-19 pandemic.
(Reporting by Aleksandar Vasovic; Editing by Bernadette Baum) ((aleksandar.vasovic@thomsonreuters.com; +381113044904;))
