World Bank Supports Serbia in its Recovery from Devastating Floods

October 3, 2014

Serbian population to benefit from enhanced energy security, better domestic food supply, and restored flood prevention mechanisms

WASHINGTON, October 3, 2014—The World Bank’s Board of Executive Directors today approved a EURO227.5 million loan (US$300 million equivalent) 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

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

“We cannot leave Serbian families in the cold this winter, so ensuring a reliable power supply is the top priority for Government and for us,” says Ellen Goldstein, World Bank Country Director for Southeast Europe. “Reliable power and an adequate agricultural harvest are also critical elements in maintaining economic activity and restoring growth to the Serbian economy in the aftermath of the floods.

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

“The recent floods exposed some of the vulnerabilities in the power sector that exist in Serbia,” said Claudia Vasquez, Task Team Leader for the project.  “This, in turn, fostered a constructive dialogue with the government and other stakeholders on important structural reform measures that are needed.  The Bank stands ready to work with Government to improve the financial sustainability of the power sector and the environment to foster investments and support job creation.”

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

Media Contacts
In Washington
Kristyn Schrader-King
Tel : 202-458-2736
In Belgrade
Vesna Kostic
Tel : 381-11-3023-723