Agreement with IMF reached - Three-year precautionary standby arrangement totalling EUR 1,2 billion signed

Board of executive managers of IMF made a decision on signing a three-year precautionary stand-by agreement with Serbia, RTS finds out.

Approved three-year standby agreement totals EUR 1,2 billion and according to the wish of Serbian authorities it is precautionary stand-by agreement, it was published at IMF’s website.

I am proud for the fact that Serbia got acknowledgement from IMF and the entire international community for difficult measures and hard work in the previous period – the Prime Minister of Serbia, Aleksandar Vucic, wrote at his Twitter account.

Program, as announced at the IMF website, is based on three basic pillars: public finance rehabilitation, promotion of stability and flexibility of financial sector and implementation of overall structural reforms.

This way, as it was stated in the announcement, solid base to open new vacancies and return of the country to sustainable growth, will be formed.

The first deputy to GM and acting president David Lipton said in the document the authorities in Serbia should be praised for “strengthening of credibility of plan of reforms by taking difficult but necessary steps last year, including labor market and pension system reforms”.

He reminded that Serbia has high public debt which is on the increase which requires fiscal consolidation in the next period.

Lipton estimated as appropriate fiscal package of the Government of Serbia which aims at repaying public debt and returning GDP to a decreasing trend by 2017. Focus on obligatory expenditures, governmental incentive decrease and minimizing fiscal risks generated from public companies is, as he says, guaranteed.

According to him, commitment of the authorities in Serbia to overall reforms is welcomed and reform of public companies, especially large ones will be of great importance for decrease of governmental support and limitation of budget burdening.

Fiscal program will also be supported through improved public finances management.

Lipton also said that fiscal consolidation creates space for gradual monetary loose which will support domestic demand after the state withdraws fiscal incentives.

Maintaining stability of financial sector and strengthening of its resistance will provide economic recovery, Lipton says and special diagnostic researches of banks should provide them to stay healthy.

Vujovic: Huge acknowledgment and commitment

Agreement with IMF is not only an acknowledgment for the Government but also a commitment to endure in reforms, the minister of finance, Dusan Vujovic said for RTS outlining that agreement is a huge acknowledgement of international community.

The most important is to send the message to investors that Serbia is a credible partner, Vujovic said and added that implementation of agreed should continue.

Speaking about Zelezara Smederevo, the minister said the only condition of IMF and EU is that it is no longer funded from the budget.