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Dušan Vujović, Serbian Finance Minister: Strong consensus on further reforms needed Interview – CORD Magazine

It is today abundantly clear that fiscal consolidation produced tangible economic results. They can only be sustained through structural reforms, the success of which depends on renewed political and social consensus among key stakeholders, as well as our ability to put aside short-term, partybased and vested interests and enable the improvement of general welfare.

This year's highest accolade 'Reformer of the Year 2018', organised by NALED, was awarded to Dušan Vujović at a ceremony in the Belgrade City Hall. NALED's Board of Directors made the award to Dušan Vujović for the results achieved in 2017 in the struggle against the grey economy, reform of parafiscal charges and creating of an environment of incentive for developing entrepreneurship.

Serbia has demonstrated its relentless determination to address its dire economic situation over the past three years. The results achieved were rewarded and recognised by international financial institutions, rating agencies, financial markets and national actors. The government has no intention of changing its course in pursuing structural reforms, but in order to achieve sustainable results it needs support from the political and economic elite.

Here we discuss the new IMF agreement, as well as the challenges ahead for the government, with Serbian Finance Minister Dušan Vujović

What has changed in the way finances are managed since there is no arrangement with the IMF?

Almost nothing has changed. The fiscal consolidation program supported by a three-year precautionary IMF stand-by arrangement has been completed substantively with the approval of the eighth and final review by the IMF Board on December 20, 2017. The program received superlative reviews both in terms of comprehensive program design and macroeconomic (fiscal and monetary) performance which consistently exceeded expectations. Formally, the program will conclude on February 20 with the acceptance of final documents which include macroeconomic data, as well as laws and Government decisions passed as of December 31, 2017.

You once said that “in the context of reforms, it would be good if we had a programme that puts us all in the situation to plan well and realise those plans." What are your thoughts about cooperation with the IMF today?

Going forward, the Government will certainly continue regular professional dialogue with the Fund on macroeconomic policies and pending structural and institutional reforms, as well as conduct periodic Article IV consultations mandatory for all member countries. Although informal dialogue may sound appealing, formal IMF programs have many advantages albeit with some strings attached. One such program is the new Policy Coordination Instrument (PCI) which appears to be a very good fit for Serbia. It allows full coordination of fiscal and macro-monetary policy, and enhanced focus on structural reforms. At the same time PCI has fewer performance criteria as it does not provide access to financing which Serbia does not need given its strong fiscal balance position and continuously declining debt-to-GDP ratios.

I hope that the scope and format of future collaboration with the IMF will be agreed soon enough to sustain the strong positive message sent to international financial markets at the end of 2017, as well as provide reliable parameters for the timely preparation of the 2019 budget which should gradually converge to the EU semester system.

Serbia’s credit rating has improved again. How will that influence you in decisions to borrow on the internal or external markets?

After years of consistent and sustainable macroeconomic and growth performance Serbia has earned the trust of rating agencies and financial markets through significantly lower interest spreads on all (especially longer-term) maturities. This will have a positive influence on our decision where and when to raise financing.

During the past two-three years Serbia did not issue large long-term bonds in international markets for three reasons. Firstly, our actual gross borrowing needs were markedly (one-two billion Euros) lower than originally planned stage due to significantly better fiscal performance: Actual fiscal deficits were two-three percent of GDP better than planned. Secondly, interest costs declined much faster in the domestic market, on smaller bond issues, and on shorter-to-medium term maturities. Thirdly, we had access to abundant low cost long-term financing for budget support from the World Bank and bilateral sources.

As a result, during the past few years we opted for cheaper sources of financing (domestic issues, IFIs and UAE loans) and, thus, significantly lowered the interest cost both in absolute (by 250 million Euros) and relative terms (by 1 percent of GDP). Over time and with improved credit rating, Serbia can now raise longer term financing in international financial markets at below two percent. This makes large international markets equally attractive and, thus, increases the probability of issuing large ten-year bond(s) this year. The decision will depend on the evolution of market circumstances in the coming months.

Whole interview is available at:


Ministry of Finance Republic of Serbia
Kneza Milosa Street 20, 11000 Београд