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The Government of the Republic of Serbia

In the service of citizens

IMF decision on successful completion of fourth, fifth revision of arrangement

Belgrade, 1 September 2016

The National Bank of Serbia (NBS) announced today that the Board of Executive Directors of the International Monetary Fund (IMF) issued a decision yesterday on the successful completion of the fourth and fifth revision of the current stand-by arrangement of the Republic of Serbia.

The statement said that this arrangement is still treated as a precautionary arrangement, without the intention of the Republic of Serbia to use the funds. The IMF said that Serbia’s economic recovery has exceeded expectations, supported by efforts to strengthen public finances, advance structural reforms, and boost investment confidence.

However, vulnerabilities remain, including from elevated public debt and lingering structural challenges in an uncertain external environment. Full implementation of programme commitments is critical to strengthen the foundations for robust and inclusive growth, restore public debt sustainability, and rebuild policy buffers.

The fiscal over-performance has continued in 2016, supported by strong revenue and tight control of current expenditures. The challenge is to sustain the fiscal adjustment to place the high public debt firmly on a downward path. The IMF welcomes the central bank’s continued commitment to the inflation-targeting regime and exchange rate flexibility is welcome.

Positive momentum in the financial sector reforms needs to be maintained by fully implementing the non-performing loans strategy.

In addition, it is critical to implement the reform agenda of the state-owned financial institutions to reduce financial vulnerabilities and fiscal risks.

Decisive implementation of the identified structural reforms is essential for reducing fiscal risks and supporting competitiveness and growth. While there has been good progress, full implementation of state-owned enterprise restructuring and resolution plans is needed to avoid further increase of fiscal risks and to achieve the programme objectives.