The mission of the International Monetary Fund (IMF) and the Serbian government have reached an agreement as part of the fifth review of the credit stand-by arrangement worth 2.9 billion euros, which could enable Serbia to withdraw an additional 380 million euros, it was announced on Wednesday by the Serbian government.
The head of the IMF mission, Albert Jegger, stated at a joint press conference that the meeting of the IMF Executive Board, which will consider the completion of the fifth review of the arrangement, is expected on September 27. Jegger said that it was agreed with the Serbian government that it would submit a law on fiscal responsibility to parliament for adoption by then, which is a condition for the successful completion of the fifth review. “If our board approves the completion of the review, Serbia could withdraw an additional 380 million euros which will be used to support its foreign exchange reserves,” Jegger stated at the conclusion of the IMF mission’s negotiations with the Serbian government, which began on August 19.
Speaking about economic indicators in Serbia, he noted that real GDP is expected to grow by 1.5 percent in 2010 and by three percent in 2011. It was also agreed that the target fiscal deficit for 2010 would generally be maintained at 4.75 percent of GDP and that the freezing of salaries in the public sector and pensions would be confirmed until the end of the year, as well as that in 2011 the target deficit would be at the level of four percent. Serbian Finance Minister Diana Dragutinović confirmed the successful conclusion of negotiations as part of the fifth review and added that the dynamics of salary growth in the public sector and pensions, starting from 2011, were agreed with the IMF mission, as well as that the law on fiscal responsibility was harmonized. The Governor of the National Bank of Serbia (NBS), Dejan Šoškić, stated that the IMF positively assessed the conduct of the NBS’s monetary policy in the previous period and announced greater engagement in the more intensive use of the domestic currency in financial transactions in the Serbian market. As part of the IMF arrangement with Serbia, a total of seven reviews are planned, and the next arrival of the mission of this international financial institution is expected in October. The IMF approved Serbia’s withdrawal of a tranche of about 383 million euros at the end of June after it positively decided on the fourth review. (H)
