THE WORLD BANK a 18R t WORLDBANKGROUP LINDA VAN GELDER Regional Director, Western Balkans Europe and Central Asia Region 11-lan-2022 H. E. Siniga Mali Minister Ministry of Finance Government of the Republic of Serbia Kneza Miloga 20, 11000 Belgrade REPUBLIC OF SERBIA Serbia: State-Owned Financial Institutions Strengthening Project (Loan No. 8832-YF) Amendment No. 2 to the Loan A,reement Excellency: We refer to the Loan Agreement, as amended to-date, between the Republic of Serbia (the "Borrower") and the International Bank for Reconstruction and Development (the "Bank"), dated March 21, 2018 (the "Loan Agreement"). We also refer to an email from Ognjen Popovi6, Acting Assistant Minister of Finance, Republic of Serbia, dated December 17, 2021, requesting the Bank to make certain amendments to the Loan Agreement. I am pleased to inform you that the Bank concurs with your request, and proposes to amend the Loan Agreement as follows: 1. The table in Section II.A of Schedule 2 to the Loan Agreement is hereby amended to read in its entirety as set forth in Annex 1 to this Amendment Letter. 2. Section III.B.2 of Schedule 2 to the Loan Agreement is hereby amended in its entirety to read as follows" "The Closing Date is December 31, 2022." 3. Schedule 4 of the Loan agreement is hereby amended to read in its entirety as set forth in Annex 2 to this Amendment Letter. All other provisions of the Loan Agreement, except as expressly amended herein, shall remain unchanged and shall continue to be in full force and effect. Tel: +43 (1) 2170 782 Fax: +43 (1) 2170 701 -2- Please confirm your agreement with the foregoing amendments on behalf of the Republic of Serbia, by signing, dating, and returning to us the enclosed copy of this Amendment Letter. Upon receipt by the Bank of a countersigned copy of this Amendment Letter, this Amendment Letter will become effective as of the date of countersignature. Sincerely, Linda Van Gelder Regional Director, Western Balkans Europe and Central Asia Region AGREED: REPUBLIC OF SERBIA By: Authu Iized Repres. ui ve Name: Title: Date: -3- Annex 1 Amount of the Loan Percentage of Expenditures Category Allocated to be financed (expressed in EUR) (inclusive of Taxes) (1) EEPs under Part 1 of the Project 36,070,210 100% (2) Goods, non-consulting services, consulting services, Training and Operating Costs for the 3,929,540 100% Project Amount payable pursuant to Section 2.03 of this (3) Front-end Fee 100,250 Agreement in accordance with Section 2.07 (b) of the General Conditions TOTAL AMOUNT 40,100,000 -4- Annex 2 Disbursement - - - - Linked Amount of the Indicator Disbursement Linked Results Loan Description For Category (1) Allocated (expressed in EUR) DLI 1. DLR1.1. BPS has adopted a business planor th 15,939,750 Restructure calendar years 2018-2020, consistent with the Banka quantitative and qualitative requirements of the BPS Postanska Conclusion (EUR 802,000) Stedionica AD Beograd DLR 1.2. An agreement detailing the business model for joint operations between BPS and PTT has been executed (EUR 3,107,750) DLR 1.3. (a) the gross amount of BPS Performing Credit Exposures to medium and large private sector enterprises has been reduced by not less than 60% by December 31, 2020, compared to December 31, 2016; and (b) the limit on BPS lending to SOEs, as set forth in the BPS Conclusion, has been complied with by December 31, 2020 (EUR 4,010,000) DLR 1.4. BPS has complied with all prudential ratios, as set forth in Selected National Bank of Serbia's Decisions, by December 31, 2020 (EUR 4,010,000) DLR 1.5. BPS gross NPLs have been reduced by not less than 50% by December 31, 2021, compared to December 31, 2016 (EUR 4,010,000) DLI 2. DLR 2.1. A diagnostic study for the Development 4,812,000 Complete Fund and AOFI has been completed (EUR 802,000) Reforms and Develop a DLR 2.2. The supervisory boards of the Strategy on Development Fund and AOFI have each adopted Development Decisions consistent with the quantitative and Finance qualitative requirements of the Development Fund Conclusion and AOFI Conclusion, respectively (EUR 1,604,000) I DLR 2.3. The Borrower has adopted a strategy for Development Finance (EUR 2,406,000) DLI 3. DLR 3.1. A tender for the sale of the SOFIs' NPLs, 15,318,460 Implement NPL in an approximate amount of EUR 145,600,000, has Resolution been issued by the Borrower (EUR 2,406,000) StrateLv' and -5- State-Owned DLR 3.2. A tender for the sale of the Prime Bucket Banks Strategy of SOF's NPLs based on the NPL Resolution Strategy, in an approximate amount of EUR 832,300,000 has been issued by the Borrower (ETR 2,406,000) DLR 3.3. MoF has adopted an Instruction, acceptable to the Bank, to request MoF's Financial Sector Department to provide advice to the Borrower's Minister of Finance on the selection of state- nominated members of the Board of Directors of State-Owned Banks (EUR 2,406,000) DLR 3.4. The Borrower has received at least EUR 140,000,000 from SOFI's NPL sales (EUR 6,600,460) DLR 3.5. A tender for the sale of the third bucket of SOF's NPLs based on the NPL Resolution Strategy, in an approximate amount of EUR 500,000,000, has I been issued by the Borrower (EUR 1,500,000).