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The International Monetary Fund (IMF) and the Serbian government reached
an agreement on the first review under the precautionary arrangement envisaging a deficit target of 4.25 percent of GDP in 2012, the
government announced in a statement on Wednesday.
State Secretary at the Ministry of Finance Dusan Nikezic said at a press
conference that the deficit target was below the legal minimum, which was
the first significant austerity measure.
Nikezic said that GDP should go up by 2 percent in 2012, whilst the
economic expansion would be lower - 1.5 percent, due to a decline in
economic activities in the eurozone.
He pointed out that the Serbian government and the National Bank of
Serbia (NBS) pursued a responsible economic policy that would enable the
maintenance of macroeconomic stability.
The IMF representative who headed the mission in the talks, Mark Allen,
expressed satisfaction with the agreement and said he expected the
Serbian government to achieve the envisaged budget deficit.
Allen said that the public debt should remain below 45 percent of GDP,
adding that the government would take steps to reduce the debt.
According to him, inflation in Serbia is slowing down and the financial system is well-capitalized.
He voiced a belief that NBS would manage to ensure stability of the financial system.
The talks between the Serbian government and the IMF mission, which are
part of the first quarterly review of the results achieved in the
implementation of the precautionary agreement, started in Belgrade on
November 3rd.
The official talks began on Wednesday with a plenary meeting at the
National Bank of Serbia, and on the same day the IMF mission met with
Prime Minister Mirko Cvetkovic.
The arrangement approved on September 29, in the amount of 935.4 million
SDRs (special drawing rights) equivalent to approximately EUR 1.1
billion, was signed out of precaution, i.e., with no intention of using
the funds except in case of balance-of-payment difficulties.
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