IMF mission, led by James Roaf, visited Belgrade during June 9–21, 2016
OREANDA-NEWS. An International Monetary Fund (IMF) mission, led by James Roaf, visited Belgrade during June 9–21, 2016, to hold discussions on the fourth and fifth reviews under Serbia’s precautionary Stand-By Arrangement (SBA) with the IMF. At the conclusion of the visit, Mr. Roaf issued the following statement:
“The IMF mission had constructive discussions with the caretaker government led by Prime Minister-designate Aleksandar Vu?i?, and reached staff-level agreement with the authorities on policies needed to complete the fourth and fifth reviews under the SBA. The agreement is subject to endorsement by the new government; completion of policy actions related to key structural, fiscal, and financial measures; and approval by IMF Management and Executive Board. Consideration by the Executive Board is tentatively scheduled for late August. The completion of the reviews will make an additional SDR 117 million (€147 million) available to Serbia under the SBA, bringing the total funds available to SDR 608 million (€762 million). The Serbian authorities have indicated that they do not intend to draw on the resources available under the arrangement.
“Strong performance under Serbia’s economic program continues. Economic growth is strengthening, supported by robust investment and rising net exports. Inflation has remained low and stable but below target, on account of lower-than-expected imported prices and food prices. The external current account deficit is declining, amid robust exports. We now expect real GDP growth of 2.5 percent in 2016, and inflation of 1.3 percent.
“The authorities have continued to make important progress in fiscal consolidation. The strong fiscal performance of 2015 continues in 2016, and all quantitative performance targets under the program for end-March were met, most by comfortable margins. Assuming continuing improved revenue collection and prudent execution of budget expenditure in the remainder of the year, the general government deficit in 2016 should fall to about 2.5 percent of GDP, compared to the original target of 4 percent of GDP, making another year of significant fiscal over-performance.
“However, important challenges remain to ensure a durable fiscal improvement and put Serbia on a higher medium-term growth path. In the fiscal area, further efforts are needed to put Serbia’s high public debt firmly on a sustainable downward trajectory, while creating space for needed public investment and building buffers for potential fiscal risks. The public sector rightsizing decision of December 2015 has been implemented as planned, and the government is committed to continue public administration reform based on in-depth functional reviews conducted in collaboration with the World Bank. This reform will improve the efficiency of the public sector while contributing to the needed deficit reduction. Strengthening the public investment framework, including careful cost-benefit analysis of all projects and integration with national development priorities, is essential to ensure the efficient use of public resources and to contain related fiscal risks.