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IMF says Serbia's economic programme on track

Author Radomir Ralev
IMF says Serbia's economic programme on track IMF Author (bnm) License: all rights reserved.

BELGRADE (Serbia) December 21 (SeeNews) - The International Monetary Fund (IMF) has completed the first review under the Policy Coordination Instrument (PCI) for Serbia, finding that the implementation of the country’s economic programme is largely on track, the fund said on Friday.

Serbia’s strong economic performance continues, supported by the recovery of private consumption and robust foreign direct investments (FDI) and exports, while economic growth is projected at 4.2% in 2018 and 3.5% in 2019, the IMF said in a statement.

Inflation remains below the mid-point of the National Bank of Serbia’s (NBS) inflation band, while the interest rates have been kept on hold since April. Bank lending growth and private sector wages are strengthening, while fiscal performance remains sound, the modernisation of the tax administration has accelerated, and public debt has fallen sharply, the IMF said.

The Serbian dinar has remained broadly stable against the euro, with the NBS refraining from significant intervention in the exchange rate as appreciation pressures have eased in recent months, the IMF noted.

The 2019 budget safeguards the major fiscal adjustment made in recent years and foresees a further decline in public debt, while accommodating higher investment spending and unwinding of crisis-era temporary measures, the fund said. "Steps to increase the use of the Serbian dinar in bank lending and deposits, and reduce reliance on the euro, are gradually yielding results."

The authorities are committed to making further progress on structural reforms in 2019, which are needed to foster private sector-led growth and ensure Serbia is put on a faster convergence towards EU income levels. Their plans include measures to reduce the size of the shadow economy, strengthen public administration, as well as reform and restructure state-owned utilities, enterprises, and financial institutions, the IMF added.

Serbia is the second IMF member country to request a PCI. It was approved on July 18, and aims to maintain macroeconomic and financial stability, while advancing an ambitious reform agenda to foster rapid growth, job creation and improved living standards.