Category: Banking and finance

24 Jul, 2020
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[UPDATED] Serbia Unleashes a Second Package of Economic Measures to Fight Covid-19

On July 30, the Government of Serbia adopted a decision on direct payments and tax benefits for the private sector.  This decision is part of the Legal framework for the implementation of the Second package of economic measures to mitigate the economic effects of the Covid-19 pandemic (The Second Package). Amounting to RSD 66 billion in size, the Second Package provides direct payments and tax benefits to the private sector, focusing on entrepreneurs and micro, small, and medium-sized enterprises (MSMEs).   It consists of: Direct financial aid: Direct aid in the amount of 60% of minimum wage per employee.  This measure […]

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26 May, 2020
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Crisis financing of businesses in Serbia

Maintaining liquidity became a hot topic for business in Serbia in the aftermath of the months-long crisis and state of emergency caused by the COVID-19 pandemic. Liquidity, defined as a debtor’s ability to settle debts towards their creditors, became more significant due to the economic fallout brought by the pandemic, and the fact that now, once the state of emergency has been lifted, the economy is expected to resume as usual after being stopped dead in its tracks at the start of the pandemic and incurring immense losses during lockdowns. When faced with liquidity issues, businesses may opt to sell […]

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25 May, 2020
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Additional explanations – Development Fund loans for maintaining liquidity and investing in working capital

As part of the legal framework to alleviate the economic fallout from the COVID-19 pandemic, the Government passed the Decree approving the scheme of financial support to businesses for maintaining liquidity and working capital in aggravated economic conditions (“Scheme“) on April 10, 2020.   Since then, the Ministry of Economy, the Development Fund of the Republic of Serbia and the Serbian Chamber of Commerce have published a number of responses to frequently asked questions regarding loans approved under the Scheme. An overview of most important explanations is presented below.   Promissory notes of loan users and personal promissory notes of […]

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11 May, 2020
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Government passes Decree establishing a Guarantee Scheme – What can Serbian business owners expect?

On April 10, 2020, the Serbian government announced economic policy measures to reduce the impact of the pandemic on the Serbian economy. These measures include financial support to businesses, inter alia, through loans on favorable terms and financing of minimum wages. The list of measures announced on April 10 is not conclusive. Namely, another regulation is the Decree establishing a guarantee scheme as an economic support measure to mitigate the consequences of the COVID-19 disease caused by virus SARS-CoV-2 (“Decree“). According to the Minister of Finance, this Decree is the cornerstone of the entire economic program of the Serbian Government […]

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08 May, 2020
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NBS issue recommendations to insurers

As part of its central bank remit, the National Bank of Serbia (“NBS“) also is responsible for the supervision of insurance company trading practices, and accordingly, it issued several useful recommendations to insurers as to how to weather the coronavirus storm. To protect the health of insurance customers and employees in the insurance sector and to prevent the further spread of diseases caused by the coronavirus, the NBS has taken steps to protect the rights and interests of insurance customers and at the same time enable those customers to continue using those services.   Deferred payment of insurance premiums Given […]

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08 May, 2020
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How limited liability company can issue corporate bonds?

The economic package measures adopted by the Government to mitigate the effects of the COVID-19 virus pandemic included the Decree on the procedure for issuing debt securities (“Decree“).  For the Serbian economy, where bond issuance is rare, the content of this Decree is an exception, however, in countries with more developed financial markets, corporate bonds are a standard form of financing.  The Decree seeks to simplify the procedure for issuing debt securities during a state of emergency, as well as within 180 days of termination of a state of emergency, with aim to encourage companies to issue debt securities to […]

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08 May, 2020
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National Assembly bids farewell to state of emergency and (some) emergency measures

Since the introduction of the state of emergency in Serbia on March 15, 2020, the Government issued a number of decrees restricting certain human rights and freedoms, such as freedom of assembly, and providing novel regulatory framework for functioning of the public sector, economy and judiciary during the state of emergency. While the primary goal of those measures was to protect public health, they also had the broader economic protection of citizens in mind, be it employees, unemployed persons or senior citizens.   However, the favorable epidemiological situation in Serbia enabled – and the needs of the economy necessitated – […]

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28 Apr, 2020
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Development Fund loan repayment moratorium

Since the declaration of the state of emergency in Serbia, authorities have introduced scores of measures aimed at easing the financial pressure on both the economy and the public by the COVID-19 pandemic. To that end, the Government issued several decrees on fiscal benefits and financial support schemes, the National Bank of Serbia introduced a moratorium on repayment of bank loans and financial leasing instruments. Neither did Serbia’s Development Fund pass up the chance to contribute to the maintenance of commercial liquidity and financial stability. How so?   The loan repayment moratorium approved by the Development Fund   In line […]

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16 Apr, 2020
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The Government of Serbia has answered to questions concerning fiscal benefits and direct payments to business entities

The legal framework for economic support measures was established on 10 April 2020 by adopting a number of regulations of the Government of the Republic of Serbia (“Government“). Within a week of their publication, however, the number of business owners’ concerns is growing. One of them is the Decree on Fiscal Benefits and Direct Benefits to Private Sector Companies and Financial Assistance to Citizens to Mitigate the Economic Consequences of COVID-19 (“Decree“), which addresses fiscal policy measures, including specifying the rules for grants made from the budget of the Republic of Serbia, VAT treatment of the sale of goods and […]

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15 Apr, 2020
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NBS cuts the key policy rate to 1.5% as negative effects of the pandemic on global economic growth are exceeding previous estimates

The Executive Board of the National Bank of Serbia (“NBS“) decided to additionally reduce the key policy rate to 1.5% at its meeting held on April 9.   This additional cut came almost a month after the previous decrease when the key policy rate was cut to 1.75% (more on that on https://www.coronavirus.geciclaw.com/the-covid-19-pandemic-response-of-central-banks/). According to the NBS’ officials, international indicators show that the effects of the pandemic on global economic growth are more severe than previously estimated, which will be reflected in movements in the international commodity and financial markets, as well as decisions of central banks and governments around […]

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11 Apr, 2020
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Issuance of securities in the era of COVID-19

Among the measures adopted by the Government on April 10, 2020, which were aimed at relieving financial pressure on the economy caused by the COVID-19 pandemic and the state of emergency was the Decree on issuance of debt securities (“Decree”). The purpose of the Decree is to instate a simpler issuance procedure of debt securities during the state of emergency, as well as 180 days after the state of emergency is lifted. However, what exactly does the Decree prescribe? Publishing a prospectus – easier than ever  The Capital Market Act (“Act”) and resultant regulations regulate publishing of debt securities prospectuses, […]

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11 Apr, 2020
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Serbian Government published a Decree on State Aid to Businesses: This is how employers can receive minimum wage grants

On 10 April 2020, the Government of the Republic of Serbia adopted the long-awaited legal framework for implementation of the Program of Economic Measures to reduce the adverse effects caused by the COVID-19 pandemic. The adoption of part of the legal framework supporting this program was announced at a press conference by the Minister of Finance and the Head of the Coordination Body Sinisa Mali. One part of this adopted legal framework is the Decree on Fiscal Benefits and Direct Benefits to Private Sector Companies and Financial Assistance to Citizens to Mitigate the Economic Consequences of COVID-19 (“the Decree“). As […]

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11 Apr, 2020
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Decree regarding financial support for business entities to maintain liquidity as part of the legal framework of state aid to economy

As part of the legal framework for implementing economic support measures, Decree 05 No: 53-3117/2020-1 establishes, as an integral part of it, a Program of financial support to business entities for maintaining liquidity and working capital in aggravated economic conditions due to the pandemic caused by the virus SARS-CoV-2 (“Program“).   RSD 24 billion are earmarked for implementation of this Program, just a part of which is the legal framework. The funds for implementation of this regulation will be provided from the budget of the Republic of Serbia for 2020 under Section 21 – Ministry of Economy. Also, the funds […]

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11 Apr, 2020
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Deadline for submission of public company reports has been extended

Since the package of measures to support the economy and to the business entities was announced, this topic attracted scrutiny and was discussed at length in expert circles. The publication of instruments for implementation of these measures, worth an estimated EUR 5.1 billion, was keenly expected.  Now that it has been published, we need to consider who was the “greatest beneficiary” and who will be most affected by these instruments.   Public companies are not exempt As business entities founded by the Republic of Serbia, an autonomous province or a unit of local self-government, public companies are an important pillar […]

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10 Apr, 2020
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North Macedonia continues to help the economy – this time, entrepreneurs

North Macedonia did not escape having a state of emergency declared, which came into force on March 18, 2020.  Prior to the declaration of the state of emergency, the Government of North Macedonia adopted a series of economic and other measures in the hope of cushioning the impact of COVID-19.  Namely, the Government is to contribute to financing 50% of salaries in the tourism, transport and hospitality sector for April, May and June 2020, which is the first of several measures to help these sectors.  In addition, North Macedonia is providing interest-free loans for companies, with a repayment period of […]

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08 Apr, 2020
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Position of authorized exchange offices during the state of emergency

The central bank of Serbia – National Bank of Serbia (“NBS”) is a public institution in charge of safeguarding the value and purchasing power of money. The core purpose of the NBS is to provide monetary and financial stability. Monetary stability means maintaining low, stable and predictable inflation rate and confidence in the value of the national currency – the Serbian dinar. Financial stability means ensuring a sound financial system in which banks and other financial institutions function well and responsibly safeguard money and other assets of their clients.  By safeguarding the value of the national currency, the NBS contributes […]

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07 Apr, 2020
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Investment in securities during the state of emergency – What is new?

Several weeks after the state of emergency was declared, the Serbian Government took some economic measures in addition to the measures imposed to contain the coronavirus epidemic.  One of the economic measures enacted by the Government concerns the Deposit Insurance Agency of the Republic of Serbia („Agency“) and its ability to invest in securities. For this purpose, the Government issued a Decree on Emergency Investment in Foreign Currency Managed by the Deposit Insurance Agency[1] (“Decree“) on March 25, 2020, which immediately came into force. Security is a document which bestows property right (real rights or obligation rights) on its holder. […]

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03 Apr, 2020
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Banking in times of crisis – Central Bank of Montenegro introduces new measures

Montenegro was one of the last countries in Europe to be affected by the pandemic.  Although the situation in the country is now under control, the impact on the country’s economy is already serious.  Small economies in countries such as Montenegro pose a big risk to the survival of banks, as crises such as this one open a bigger window for banks to perish. The Central Bank of Montenegro (Montenegrian: Centralna banka Crne Gore – “CBCG”), therefore, reacted promptly by adopting two provisional measures in order to preserve banks’ liquidity.   How are banks’ operations changing? The CBCG has introduced […]

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03 Apr, 2020
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National Bank of Serbia scraps transaction fees on donations

During the global coronavirus pandemic, it has become apparent that the State and general public cannot fight the disease alone.  The situation does not require just sound management by the authorities, but it also requires the general public to step up and take responsibility and show a sense of duty to help.  Companies and private individuals have donated funds to the State, healthcare facilities and vulnerable categories. To encourage those wishing to donate, the National Bank of Serbia (“NBS”) adopted a Decision on Transaction Fees on Donations to Combat Covid-19 (“Decision”). Special-purpose accounts are opened for donations and these transfers […]

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01 Apr, 2020
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Despite the COVID-19 pandemic, Serbia rated “BB+ with stable outlook” by Fitch Ratings

As pessimistic economic forecasts, caused by the COVID-19 pandemic, are pouring in suggesting that a global recession is inevitable, many states are attempting to implement economic and monetary measures to minimize the effects of the current humanitarian and economic crisis as much as possible. Serbia is no exception, in this regard. Indeed, due to the economic and monetary measures it has decisively implemented in the wake of these extraordinary circumstances, Serbia managed to maintain a positive credit rating with Fitch Ratings, one of the “Big Three” global credit rating agencies.   Positive credit rating well-deserved, Fitch Ratings says In its […]

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Serbia Unleashes Unprecedented EUR 5.1 Billion Aid Package

On March 31, 2020, the Serbian Government adopted a €5.1 billion program of support measures for the economy (the Serbian Program).  According to the Minister of Finance, Siniša Mali, who announced the measures earlier in the day “[the Serbian Program] is equivalent to half of the State budget and 11% of national GDP”. What makes it a legal rarity is that this is a precedent of ‘Covid-19 EU Association State aid’.  In other words, this is the first case of Covid-19 related measures and aid being introduced in an EU association country based on Article 107(b) and (c) of the […]

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31 Mar, 2020
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COVID-19 and temporary closures of small businesses – what happens to cash registers?

The outbreak of COVID-19 has undoubtedly affected all aspects of the Serbian economy.  While many company executives have come forth with pessimistic forecasts regarding the overall economic and business stability, most employees are in fear of losing their jobs and, thus, their livelihoods. But how is the escalating situation affecting small businesses, such as entrepreneurs?   Entrepreneurs bear the brunt Measures implemented by the authorities to thwart a massive outbreak of COVID-19 in Serbia included a ban on public gatherings, a curfew, restaurant and coffee shop closures, as well as closures of recreational and entertainment amenities.  The primary aim of […]

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26 Mar, 2020
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Banking Agencies in BIH announce coronavirus relief measures

Like most prudential regulatory bodies the world over, those in the Republika Srpska and the Federation of Bosnia and Herzegovina have adopted measures to facilitate the repayment of loans owed by private individuals and legal entities to banks in the Republika Srpska, and respectively to banks and non-depository financial institutions (microcredit organizations and leasing companies) in the Federation of Bosnia and Herzegovina, while maintaining the stability of the financial system.   Decisions adopted by the Banking Agencies On March 20, 2020, the Banking Agency of the Republika Srpska adopted the Decision on Temporary Measures to be implemented by Banks to […]

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25 Mar, 2020
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Central Bank of Montenegro imposes moratorium – What does it entail?

On March 19, 2020, the Central Bank of Montenegro (Montenegrin: Centralna banka Crne Gore – “CBCG”) adopted the Decision on interim measures to mitigate the adverse effects of the new coronavirus on the financial system imposing a minimum 90-day delay on bank loan repayments and which is applicable to all businesses. The moratorium applies to those using all types of financial instruments and loans: cash loans, mortgage loans, investment loans, overdrafts and so forth.   Obligations of banks and debtors In order for debtors to exercise their right to the moratorium on debt repayment, they must file a request for […]

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25 Mar, 2020
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Tax Administration of Montenegro postpones deadlines

Montenegro is the last European country to be hit by the COVID-19 pandemic.  While no state of emergency has declared, Montenegrin authorities have unveiled a series of measures to alleviate economic hardship and prevent the country from slipping into recession.  In light of the current situation, the Montenegrin Tax Administration is postponing filing deadlines for tax returns and financial statements.   Breathing space In ordinary circumstances, the statutory filing deadline for financial statements and income tax returns is March 31, 2020. The latest decision by the Montenegrin Tax Administration moves the deadline back by 15 days to April 15, 2020. […]

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24 Mar, 2020
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The COVID-19 pandemic & response of central banks

Increased uncertainty about the economic outlook The global spread of the COVID-19 virus is a human tragedy on a massive scale and it strongly hit Europe, which is currently the epicenter of the global outbreak. As the virus rapidly spreads, it has become obvious that the global financial system will face its biggest challenge since 2008. Quantifying the economic impact of the current crisis is extremely complex and gives rise to significant uncertainty about the economic outlook and the associated negative consequences. Such an abrupt rise in uncertainty can put both the economic growth and financial stability at risk.  Investors […]

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24 Mar, 2020
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From the comfort of your home to the business relationship with the bank

Due to the global COVID-19 pandemic, a state of emergency was declared in Serbia on March 15, 2020. Restrictions are in place on the movement of people in order to curb the spread of the virus and flatten the curve. Given that COVID-19 spreads from person-to-person, the only measure of protection is to avoid social contact. As of March 16, teaching at schools and universities has been suspended and kindergartens closed. That said, some institutions remain open, such as courts, municipal authorities, notaries public, banks and other financial institutions all with the aim of keeping the cogs of business turning. […]

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19 Mar, 2020
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Day-to-day transactions & digital banking solutions

Even though the World Health Organization has not issued any warnings about the possibility of spreading the coronavirus through the use of cash, customer appetite for digital banking services is likely to increase, forcing many traditional financial institutions to fast-track digital innovations. As a result, many legacy banks and credit unions may turn to fintech firms for assistance in rolling out improved digital banking solutions. Accordingly, many banks have taken steps in their day-to-day functioning to reduce the risk from the coronavirus outbreak. Why take the risk with traditional payment methods which could expose countless people to the COVID-19 infection, […]

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18 Mar, 2020
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COVID-19 outbreak: financial market ramifications

COVID-19 outbreak: financial market ramifications The COVID-19 pandemic has already left its mark on Serbia’s economy, and the belief is this is merely the tip of the iceberg for the financial sector in particular. Uncertainties abound. Bankers are concerned about borrowers’ ability to service their debts, while it might not be long before we see companies being hit with payment defaults. Additionally, there waning confidence about project finance transactions. Specific issues in financing agreements Loan agreements – payment defaults Companies could soon find themselves in the midst of a cash flow problem, which in turn could leave them vulnerable to […]

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COVID-19: Compare multiple jurisdictions across the globe with TerraLex

We are pleased to share the TerraLex Coronavirus Business Response Resource Center with you. It is a compilation of business solution resources from TerraLex members, some of the finest and best ranked firms, from around the globe relevant to contracts, labor, business continuity, etc. TerraLex and its members understand that in the rapidly evolving challenges posed by coronavirus and the prospect of recessionary times ahead, businesses are struggling with a variety of issues and looking to their trusted advisors for help. This Resource Center functions just like our cross-border guides. Visitors can select specific topics of interest and specific jurisdictions […]

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17 Mar, 2020
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National Bank of Serbia Introduces 90-Day Moratorium on Loan Repayments

National Bank of Serbia Introduces 90-Day Moratorium on Loan Repayments On March 17, 2020, Serbia’s central bank (Serb. Narodna banka Srbije – NBS) adopted two decisions on temporary measures, imposing a minimum 90-day delay on bank loan repayments and leasing repayments applicable to all businesses and the general public alike.  This newly adopted legislation is just one amongst the many introduced, and still being contemplated, measures to shore up liquidity in an attempt to preserve the country’s financial stability against COVID-19 fallout. The delay is generally applicable and includes natural persons, farmers, entrepreneurs, SMEs and corporations.  It will last for […]

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