IMF: Serbia needs to stop subsidizing unprofitable public enterprises

The head of the Serbian office of the International Monetary Fund (IMF), Sebastian Sosa, stated on Wednesday, February 15, 2017, that Serbia needed to stop subsidizing unprofitable public enterprises and find a long-term solution for them.

In his interview for Bloomberg, ahead of the IMF delegation’s visit to Serbia, to take place from February 27 till March 6, Sosa said that fiscal expenses for unprofitable public enterprises, which were among the largest state budget expenditures, needed to be reduced.

Prime Minister Aleksandar Vucic promised to IMF that he would restructure, close or sell several hundred state companies operating with losses and costing the state budget around a billion euros annually. The list includes RTB Bor, Azotara and Metanolsko-Sircetni Kompleks (MSK). After having reduced the fiscal gap from 6.6% in 2014 to 1.4%, Serbia should be able to secure profit by no longer setting aside money for ailing companies.

Sosa said that Serbia needed to “stop with subsidies, debt repayment, financing these companies through arrears for electricity or gas, or arrears for social security payments and find a permanent solution”.

According to him, IMF will study budget spending and how that will affect this year’s fiscal outlook. The IMF delegation will talk about the progress made in finalizing earlier agreements in order to “ensure that the structural reform agenda is completed in this final year” of the three-year arrangement.

The economic growth will jump by 3% in 2017, after a growth of 2.7% in 2016, mostly thanks to “accelerated growth of private consumption and investment”. According to IMF projections, the inflation will remain within the targeted limit of 3%, up or down 1.5 percentage points.

Međunarodni monetarni fond - MMF Beograd

Serbia Zijin Copper doo Bor

HIP-AZOTARA d.o.o. Pančevo

MSK a.d Kikinda

International Monetary Fund

IMF

Sebastian Sosa

Aleksandar Vucic

Rudarsko Topionicarski Basen Bor

RTB Bor

Azotara

Metalsko Sircetni Kompleks

MSK

financing public enterprises

inflation

economic growth of Serbia

subsidizing unprofitable state companies