News

Serbia, IMF agree on loan revision

The loan is worth a total of EUR 2.9bn, and Serbia will now be able to use another tranche in the amount EUR 380mn, Finance Minister Diana Dragutinović announced on Thursday in Belgrade. Dragutinović also noted that the slowed down economic growth saw the projected GDP rise figure go from two to 1.5 percent for this year, and from four to three percent for 2011. The minister also told reporters that public sector salaries and pensions would remain frozen this year, but that those who are paid from the budget would receive bonuses in the second half of 2010. Dragutinović announced that tax system reforms would start on January 1, 2011. The visiting IMF mission also discussed the issue of legislation related to fiscal responsibility as they were meeting with Serbian officials. Serbia has so far withdrawn approximately EUR 1.3bn of the IFM loan. IMF warns of “difficult years” Head of International Monetary Fund (IMF) mission to Serbia Albert Jaeger stated on Thursday that 2010 and 2011 will be two difficult years for Serbian citizens, due to the slow economic growth and recovery, and added that Serbia needs to reduce its public expenditure and reinforce fiscal discipline in order to cope with the slow growth. The reasons for this are the revision of the GDP, which will be reduced from 2 percent to 1.5 in 2010, i.e. from 4 to 3 percent in 2011, and the decrease in the exports and lower investments level, Jaeger said at a joint press conference of IMF representatives and the Serbian government. Jaeger added that the government also needs to submit a bill on pension system and a bill on fiscal discipline by the end of the year. Commenting on the dinar exchange rate, Jaeger said that the floating exchange rate has helped Serbia cope with the negative effects of the global crisis and that it has stimulated the country's export, although not everyone in Serbia is happy about the national currency's decline. Jaeger announced that, provided that the Serbian government accepts the IMF agreement, the Fund's Board of Executive Directors will hold a meeting in June at which the fourth review of the stand-by credit arrangement with Serbia should be adopted, and withdrawal of another EUR 380mn granted to the country for the purposes of strengthening of foreign reserves. Source: Beta, Tanjug