IMF Executive Board adopts sixth review of arrangement with Serbia

Executive directors of the International Monetary Fund (IMF) confirmed on Friday, December 16, the positive review of the sixth review of the Precautionary Arrangement which the institution signed with Serbia in February 2015 and assessed that Serbia had improved its business environment considerably.

Deputy Managing Director of the IMF, Tao Zhang, stated that the arrangement the Fund had signed with Serbia was making results, supported by the macroeconomic situation and structural reforms.

– The economy continues to strengthen, supported by the authorities’ efforts to improve public finances, address structural weaknesses, and strengthen the financial sector – Zhang wrote in his statement.

The employment rate is growing, the IMF states, the inflation remains under control, and the public debt has begun to drop. The full implementation of regulations and the reform agenda are crucial to improving the business climate and support a medium-term growth.

– Significant progress has been made in fiscal consolidation in 2016, on account of strong revenues and ongoing expenditure control. Institutional reforms aim to secure fiscal sustainability and improve public services – Zhang wrote.

He adds that Serbia has achieved notable improvement in the business environment, but more needs to be done to boost investor confidence and medium-term potential growth.

According to him, particular efforts should be made to improve the court system, strengthen the quality of the judiciary process, and facilitate the use of effective out-of-court arbitration.

Priorities include the continuation of reforming the public administration and wage system, and strengthening public investment management. Further efforts are also needed to minimize fiscal risks through a restructuring of unviable state-owned enterprises, especially in the mining, energy, and transportation sectors.

The authorities, according to the IMF, are taking steps to strengthen public project appraisal and implementation, and modernize the educational system.

Financial sector reforms have strengthened the resilience of the sector. The strategy for resolving nonperforming loans has helped reduce the overall bad loan ratio, and the authorities remain committed to its full implementation, especially with respect to state-owned banks, in the IMF’s estimation.

Serbia signed the Precautionary Stand-By Arrangement with the IMF, worth around EUR 1.2 billion, in February 2015, and the completion of the sixth review has put around EUR 850 million at the country’s disposal.

VUCIC: Reforms to continue

Prime Minister Aleksandar Vucic is satisfied with the decision of the IMF Board. He says that he expected such an assessment to be made and that Serbia will continue to carry out the agreed reform program.

– This means that we’re on the right track. We have successfully completed the sixth review and we will continue if we have enough energy, but also discipline, responsibility and desire to change ourselves – Vucic pointed out.

Međunarodni monetarni fond-MMF Beograd

International Monetary Fund

IMF

Precautionary Stand By Arrangement with IMF

Tao Zhang

inflation

public debt of Serbia

public finance

fiscal consolidation

restructuring public enterprises

non performing loan

bad loans

Aleksandar Vucic

sixth review of Precautionary Arrangement of Serbia with IMF

public administration reform

wage system reform

NPL resolution strategy