IMF mission, Serbian government reach agreement

BELGRADE — The IMF mission and the government reached Monday an agreement to complete the first review of the precautionary Stand-By Arrangement approved to Serbia.

The IMF mission has reached staff-level agreement with the Serbian authorities subject to approval by the IMF Management and Executive Board on the set of policies needed to complete the first review under the precautionary SBA, Zuzana Murgasova, IMF representative, told a press briefing.

The completion of the review will make available additional EUR 146 million, although the Serbian authorities have indicated that they do not intend to draw on the resources available under the arrangement, Murgasova said.

The economic outlook is somewhat improved, she said, stressing that the authorities’ steadfast implementation of sound economic policies and structural reforms is essential to foster robust growth in the coming years.

Fiscal performance in the first quarter of 2015 was fully in line with the program targets, Murgasova said, adding that most of the fiscal consolidation measures underlying the 2015 budget have been implemented as planned.

The decision on an electricity price increase will be taken at the beginning of June, simultaneously with a program for restructuring the Serbian electric power company EPS, Finance Minister Dusan Vujovic said on Monday.

„According to economic criteria, the electricity price should be increased immediately but we want to ensure that the population is protected and that the EPS is able to operate,“ Vujovic told a press conference after an International Monetary Fund mission concluded an official visit to Serbia.

The minister said that the government wants to postpone the electricity price increase because each day of delay means much to the population, and not because it is indecisive.

Zuzana Murgasova said that there was no discussion on Monday about a potential increase of pensions and public sector salaries, and that the goal of the economic program being implemented by Serbia is fiscal sustainability, which the government has achieved by cutting salary and pension expenditures over the medium term.

Under the cost cuts program, the total salary and pension expenditures should be reduced to 7 percent and 11 percent of GDP, respectively, Murgasova said at a press conference with Vujovic, responding to questions about the possibility of salaries and pensions being restored to previous levels.

It will take some time to implement this, Murgasova said, adding that the implementation of all measures must continue in order to achieve these goals.

The government is fully committed to implementing the policy from its program and we did not discuss any potential increase, Murgasova said.

Source: Tanjug