The World Bank's Board of Executive Directors approved a EURO227.5 million (US$300 million equivalent) loan for the Floods Emergency Recovery Project for Serbia.
The loan will support Serbia in meeting critical needs in the power and agriculture sectors, repairing damaged flood control infrastructure, and helping the country better respond to natural disasters. The project was prepared following flooding in mid-May, which was the worst to hit the country in documented history, World bank said in a press release.
The floods directly affected some 1.6 million people, or about one-fifth the total population of Serbia, living in 49 municipalities and cities. Beyond this, the disaster has had a broader impact on the country as a whole due to the damage to the country’s electricity generation and supply system.
The Floods Emergency Recovery Project focuses on priority sectors identified in a Recovery Needs Assessment (RNA) conducted by the Government in June and July, and supported jointly by the European Commission, United Nations Development Programme (UNDP), and the World Bank.
The operation will help close the financing gap for the energy purchases to ensure power during the upcoming winter, and will also strengthen critical energy infrastructure. In particular, the operation will dewater Serbia's largest mine, the Tamnava West Open Pit Mine - which remains inundated and unable to provide two-thirds of the fuel supply for the country's Kolubara power plant - while financing substitute electricity sources.
In the agriculture sector, the project will help ensure direct support to farmers in affected areas, providing these farmers with the income security needed to invest in their farms. The project will also help improve resilience to disasters by financing repairs to critical flood prevention infrastructure.
Specifically, in the power sector, the project will support electricity imports (EURO 120 million) to improve availability and avert an impending energy crisis, particularly over the first winter heating season following the floods. It will also support selected load management measures, including strengthening the distribution network, providing metering devices for the flood-affected areas, and energy efficiency measures.
In the agricultural sector, the Floods Emergency Recovery Project will replenish the government's ongoing Farm Incentives Program in order to protect the livelihood of farmers affected by the floods and offset their income losses, with EURO 53 million to cover the costs of this program for payments to farmers in the 49 municipalities affected by the floods.
Remaining funds from the loan will finance urgent rehabilitation of the flood protection and drainage control infrastructure, and strengthen the technical capacity of the government agencies for improved flood prevention and management.
With this operation, the World Bank portfolio in Serbia includes 8 operations totaling approximately US$1.1 billion. Areas of support include environment, health, social safety and employment, local infrastructure, education, competitiveness, and financial sector development.