Serbia to take out loan of 135 million euros from Germany’s KfW for energy and environmental sector reform

The Government of Serbia adopted at its last session the Draft Law on the Confirmation of the Loan Agreement between Germany’s KfW and the Republic of Serbia. The loan in the amount of 135 million euros concerns the reform of the energy and environmental sectors in Serbia.

This loan agreement between KfW and our country was signed on July 18, 2025. The agreement represents the second phase of the joint development policy instrument between the World Bank, the French Development Agency and KfW.

– The terms of this loan are in line with the OECD requirements applicable on the date of signing this agreement for the purpose of its recognition as Official Development Assistance (ODA). On this basis and provided that the Federal Republic of Germany issues a loan guarantee, KfW will approve the Loan in accordance with the terms of this loan agreement – the adopted document states.

KfW will grant Serbia a loan not exceeding a total amount of EUR 135 million and, as emphasized, it will not finance taxes and other public duties that represent the borrower’s obligations, as well as customs duties.

– KfW will disburse the entire loan amount to the borrower in one tranche after receiving the original Disbursement Request duly and properly signed by the Ministry of Finance, provided that all prerequisites for disbursement have been met. KfW has the right to reject a disbursement request received after June 30, 2026. KfW also has the right to request additional documents and evidence that it deems necessary in its discretion to confirm that the conditions have been met, before disbursing the loan funds – the document specifies.

The Agreement provides that Serbia shall pay a non-refundable fee on undrawn loan funds in the amount of 0.25%, payable semi-annually for the past period, on May 15 and November 15 of each year, and for the first time on November 15, 2025.

Interest on the disbursed loan amount shall be calculated from the date (inclusive) when the corresponding loan amount is disbursed from the account opened by KfW for the borrower until the date (exclusive) when the individual loan repayment installments are paid into KfW’s account.

The loan is to be repaid in 17 equal monthly installments of EUR 7,941,176 each, from May 15, 2027 to May 15, 2035.

– The Borrower and KfW will from time to time and at the request of either party consult and exchange views on the development of the program and the progress made in implementing sector reforms. Prior to each such consultation and exchange of views, the Borrower will submit to KfW for its consideration and comments a report on the progress of the implementation of the Program, in as much detail as KfW may reasonably request – the document states.

Vlada Republike Srbije

KfW kancelarija Beograd

Draft Law on the Confirmation of the Loan Agreement between KfW and the Republic of Serbia

reform of the energy and environmental sectors in Serbia