June 14 (SeeNews) - The International Monetary Fund (IMF) said it reached a staff-level agreement on a 30-month Policy Coordination Instrument (PCI) with Serbia to keep public debt on a downward path while supporting its sustainable growth.
The PCI-supported programme aims at maintaining macroeconomic and financial stability and advancing an ambitious structural and institutional reform agenda to foster rapid and inclusive growth, job creation and improved living standards, the IMF said late on Wednesday in a concluding statement of a mission that visited the country in June 11-13.
"For 2019 onwards, the programme targets a small overall deficit, aiming to reduce public debt to below 50% of the gross domestic product (GDP) by the end of the programme, while providing space for an increase in capital spending and some targeted reductions in the tax burden on businesses and labour," the leader of the IMF mission, James Roaf, said in the statement.
The PCI would also accommodate the unwinding of the crisis-era temporary pension cuts, and the transition to the new public wage system, while ensuring that the pension and wage bills do not increase as shares of GDP, Roaf said.
"The programme will advance a comprehensive set of public administration reforms. Completing the employment and wage system reforms will be critical for improving the efficiency of public services and containing current expenditure. Stronger public investment management frameworks will improve execution and reduce gaps in public infrastructure. Reforming tax administration will help to increase the efficiency of revenue collection and improve the business climate. Strengthening fiscal rules will secure sustainable budgetary policies over the medium terms," he noted.
The implementation of a comprehensive set of structural and institutional reforms is aimed to improve the business environment to support higher private sector-led growth, Roaf also said. "Policy priorities include fighting the grey economy; further increasing labour force participation; reforming or resolving public and state-owned enterprises; and improving the quality and transparency of national statistics."
The programme will promote public administration reforms, including the employment and wage system reforms.
The IMF's executive board is exppected to consider the PCI agreement in the middle of enext month.