IMF: Seventh Review of Serbia’s Stand-By Arrangement Successfully Completed

The Executive Board of the International Monetary Fund (IMF) today successfully completed the seventh review of Serbia’s economic performance under the Stand-By Arrangement (SBA), as communicated by IMF.

IMF assessed that the 36-month SBA for Serbia approved on February 2015 remains on track, with strong macroeconomic performance. Real GDP is now above pre-crisis levels.

According to IMF, inflation remains anchored within the target band and the current account deficit has narrowed, as stated in the National Bank of Serbia communication.

IMF Executive Board ascertained that Serbia’s business environment has strengthened but further progress on implementing the structural reform agenda is needed, especially in areas of modernizing education, strengthening tax administration, and restructuring of state-owned enterprises and utilities.

It is underlined that strong revenue performance has supported a fiscal consolidation and allowed for much less expenditure contraction than originally envisaged. However, containing non-discretionary current spending remains an important priority to support the needed debt reduction while creating fiscal space for higher capital spending.

According to IMF Executive Board, monetary policy has succeeded in keeping inflation under firm control, while the broad exchange rate stability has reinforced confidence and helped reduce euroization.

Financial sector reforms under the program have strengthened the resilience of the sector. It is now in a stronger position to fully support future growth – as stated in IMF communication.
However, it is added that efforts to reduce NPLs need to continue, and reforms of state-owned financial institutions need to be accelerated.

The completion of the review will make available an additional €64.9 million available to Serbia under the SBA, bringing the total funds available to €918.5 million.

The Serbian authorities have indicated that they do not intend to draw on the resources available under the arrangement.