Analysis 20 Nov 17

Serbia’s IMF Arrangement Ends on High Note

Belgrade’s 1.2 billion euro Stand-By Arrangement with the IMF is slowly coming to its end on a positive note, though experts warn that some serious challenges for the economy still lie ahead.

Stevan Veljovic
James Roaf, head of the IMF mission for Serbia and Dusan Vujovic, the Serbian Finance Minister. Photo: Beta 

Under the IMF's watchful eye, over the past three years, Serbia has curbed its growing fiscal deficit, which was 6.6 per cent in 2014, and its public debt, which was near 75 per cent of the country’s GDP at the end of 2015 – 30 per cent above the legal ceiling.

“Significant fiscal over-performance has continued,” the IMF mission said in a laudatory press release on November 8, following the eighth and final review under the arrangement.

"The general government balance for this year is projected to be around zero, compared to the original budget deficit target of 1.7 percent of GDP. The public debt-to-GDP ratio fell to 65.4 per cent at end-September, more than 10 per cent of GDP below the 2015 peak,” the IMF statement added.

Serbia’s “fiscal over-performance” has convinced the mission, led by James Roaf, to agree to government plans to increase salaries by 5 to 10 per cent for employees in social services, civil servants and pensioners – whose payments were cut in late 2014 as a part of austerity measures. The increases will come into effect next January.

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