IMF satisfied with improvement of state of economy in Serbia – Salaries and pensions to be discussed in autumn

The head of the International Monetary Fund mission, James Roaf, stated on July 5 that the Government of Serbia and the National Bank of Serbia had achieved “a dramatic improvement” of the state of economy in Serbia.

– Looking back at our previous consultations in line with Article Four, in February 2015, we can see that the Government and the NBS have achieved a dramatic strengthening of the economy and an improvement of the economic situation – Roaf said to the press at the Government of Serbia.

He said that the IMF projected an economic growth of 3% in 2017 and that the projection of deficit had been reviewed down to 1.1% of the GDP, the lowest level since 2005. Roaf said that the IMF had determined that the public debt was dropping faster than expected.

– It's important that there has been a fiscal consolidation, progressing faster than planned. That has been associated with a faster growth than we expected – Roaf said, but also estimated that the Serbian economy continued to suffer from serious vulnerabilities and structural weaknesses and was burdened by an oversized and inefficient public sector and that it needed to turn to the growth of the production sector.

Illustrating the results achieved, Minister of Finance Dusan Vujovic said that the government still planned a growth of the GDP of 3% in 2017, that the public debt had dropped to 67.1%, that the budget deficit had been reviewed down from 1.7% to 1.3%, and that the risk premium was four times lower, making for lower expenses paid in incurring debt.

The minister of finance also pointed out that the budget surplus amounted to RSD 33.2 billion at the end of June, 80 billion above planned, whereas the exports, accordign to him, increased by 13.3% in the first five months.

Up to Serbia whether to seek new arrangement with IMF

Roaf also said that it was up to the authorities in Serbia to decide whether they wanted a new arrangement with the IMF. Commenting on the statement of Prime Minister Ana Brnabic that Serbia might give up on renewing the three-year precautionary arrangement with the IMF, Roaf said that the issue had not been the focus of the talks.

– We focused on a successful completion of the current arrangement. It is fully valid for the Government and the NBS to review their position, as it is up to them whether to seek another arrangement or not. From the point of view of the IMF, we are still prepared to provide support and help Serbia – Roaf explained.

Salaries and pensions to be discussed in autumn

Potential salary and pension raises in Serbia will be discussed in September or October, during the Mission's next visit, Roaf said and advised moderation in dealing with the issue.

– If the current trend regarding revenues continues, they might be expected to grow in 2018 as well. This points to the possibility of potential additional room for raising wages and pensions next year, but we will discuss this when we come back – Roaf said.

President Aleksandar Vucic also met with Roaf, and the meeting was attended by Prime Minister Ana Brnabic and Minister of Finance Dusan Vujovic.

Međunarodni monetarni fond - MMF Beograd

Vlada Republike Srbije

Narodna banka Srbije Beograd

Ministarstvo finansija Republike Srbije

IMF

James Roaf

NBS

economic growth of Serbia

public debt

fiscal consolidation

Dusan Vujovic

Ana Brnabic

IMF arrangement

salaries

pensions

export

budget surplus