Signing a Loan Agreement in Bosnia and Herzegovina
Tuesday, 24 November 2009
A Loan Agreement was signed in Sarajevo between Bosnia and Herzegovina and Kuwait Fund for Arab Economic Development, during the State Visit of His Highness Sheikh Naser Mohamed Al-Ahmad Al-Sabah, the Prime Minister of the State of Kuwait to Bosnia & Herzegovina, whereby theFund will make a Loan of (K.D. 10,500,000) Kuwaiti Dinars ten Million five hundred thousand, (equivalent to about US$ 37 million), to assist in the financing of Kakanj – Donja Gracanica Highway Project inBosnia and Herzegovina.
The Loan Agreement was signed on behalf of Bosnia and Herzegovina by His Excellency Dragan Vrankić, Minister of Finance and Treasury, whereas His Excellency Sheikh Dr. Mohammad Sabah Al-Salem Al-Sabah, Deputy Prime Minister and Minister of Foreign Affairs and Chairman, Board of Directors of Kuwait Fund for Arab Economic Development, signed the Loan Agreement on behalf of Kuwait Fund.
The project aims at meeting the increasing demand for local transport for goods and persons, and thus enhancing the economic and social development for citizens in the project area, in addition to enhancing the regional trade, especially with North East Europe counties, which will promote the general aspects of development in Bosnia and Herzegovina.
The Project consists of the construction of an asphalted four lanes (15 m wide) toll highway between "Kakanj and Donja Gracanica" with an approximate length of 24 Kilometers and paved shoulders and includes land acquisition, construction works including earthworks, paving layers, bridges works, tunnels works, drainage facilities, toll collection facilities and safety measures, as well as engineering services for the design and the supervision of construction.The Project is expected to be completed by the end of 2012.
The total cost of the Project, is estimated at (BM 570) million, which is equivalent to about (KD 111) million Kuwaiti Dinars or (US$ 389 Million) About (10%) of which, amounting to KD (10.5) million, equivalent to (US$ 37 million) shall be covered by Kuwait Fund, and the remaining amounts shall be covered by the government of Bosnia and Herzegovina and other financiers.
The Loan shall be for a period of 25 years including 5 years grace period, and will be amortized on 40 semi-annual installments, the first of which will be due on the first date on which interest or other charges on the loan shall be payable according to the Loan Agreement after the elapse of the grace period. The Loan bears interest at 2% per annum, in addition to 0.5% per annum to cover administrative and other expenses incurred in the implementation of the Loan Agreement.
By extending this loan, the Fund will have made 4 loans for financing development projects in the sectors of potable water, roads and social development in Bosnia and Herzegovina, the total amount of these loans, including this loan, being (K.D 24.8) million (equivalent to about (US$ 87 million).In addition the Fund also provided an amount of K.D. 350,000 (equivalent to about (US$ 1.23 million) as technical assistance for the preparation of a master plan for Water Supply and Sanitation in Sarajevo.