The Government of Serbia has reached an agreement with the delegation of the International Monetary Fund (IMF) on a new 30-month arrangement, which will not be financial, but an advisory arrangement (Policy Coordination Instrument – PCI), the IMF announced today, Beta reports.
The IMF delegation, headed by James Roaf, visited Belgrade from June 11
for the completion of the talks about the new program with Serbia concerning macroeconomic policies and reforms, which the Executive Board of the IMF is to approve in mid-July.
PCI is new instrument, implemented by the IMF in 2017, to the end of providing support to countries like Serbia, for which a framework envisaged by the IMF program is useful, but which don`t need financial support by this institution.
– The program supported by the PCI aims to maintain macroeconomic and financial stability and secure progress in the realization of the ambitious plan of structural and institutional reforms for the purpose of stimulating a quick and inclusive growth, creating new jobs and raising the standard of living – Roaf explained.
He said that Serbia`s macroeconomic outlook was still good, that the growth had reached the level of 4.6% y-o-y in the first quarter and that it was expected to reach at least 3.5% in the current year, and that the inflation was still low and that it was projected at around 2% by the end of 2018, thanks to the support of the adequate monetary policy of the National Bank of Serbia.
– Fiscal policy under the PCI aims to maintain the positive results, which were not easy to achieve, to the end of securing a stable reduction of the public debt, while providing support to a quicker sustainable growth. We expect public finances to realize a surplus this year as well – Roaf said.
He added that, from 2019 onward, the aim of the IMF`s program with Serbia was a low total deficit, which would lead to a reduction of the public debt to the level below 50% of the GDP by the end of the program and provide room for an increase of capital spending and for certain reductions of tax burdens on the economy and labor.
Roaf estimated that there was also room for the abolition of the temporary reduction of pensions from the time of crisis and for a shift to a new system of salaries in the public sector, while making sure for the share of the mass of pensions and salaries in the GDP not to grow.
– The program will support the all-encompassing package of reforms of the public administration. The completion of the reforms of the employment and salary system will be of crucial importance for improving the efficiency of public services and reining in the current spending. Better frameworks for public investment management will lead to better performances and a reduction of flaws in the public infrastructure – Roaf said.
The reform of the tax administration in Serbia, according to him, will help increase tax collection efficiency and improve the business climate, and the strengthening of fiscal rules will secure the sustainability of the budget policy in the medium term.
Roaf said, as reported, that the new program with the IMF would help Serbia manage dinarization, supervision and financial sector regulation reforms and completion of reforms of state financial institutions, but also remove flaws in countering money laundering and the financing of terrorism.
– The implementation of the all-encompassing package of structural and institutional reforms aims to improve the business environment to the end of providing support to a quicker economic growth headed by the private sector. The priorities are fight against grey economy, further increase of the participation in the workforce, reformation of the finding of a permanent solution for public and state companies and the improvement of the quality and the transparency of state statistics – Roaf pointed out.
The previous three-year precautionary arrangement between Serbia and the IMF expired this February
and was worth around EUR 1.2 billion, but Serbia didn`t use the loan, Beta reports.Public sector salaries to increase by 8-10%?
Minister of Finance Sinisa Mali said that the law on the temporary reduction of pensions would be fully abolished in 2018
– Those to which the law didn`t pertain can count on their pensions being raised. By how much will be known in September when we see how much room there is in the budget – Mali said.
As he said, the IMF insists on not disclosing the percentages before September.
– Salaries will also be raised, but the amounts will also be known in September – Mali said, N1 reports.
As Blic writes in today`s issue, the Government of Serbia proposed for an increase of public sector salaries of 8 to 10% to the IMF representatives. According to the government`s plan, medical doctors, police members and teachers and professors in primary and secondary schools would have their salaries increased by 10%, whereas other public sector employees would get a raise of around 8%.
For example, a teacher earning RSD 40,000 at the moment would be earning RSD 44,000 after the increase, the daily writes.
A medical specialist would earn RSD 80,300 instead of 73,000, whereas a police inspector would earn RSD 51,700 instead of RSD 47,000.