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The Government of the Republic of Serbia

In the service of citizens

Talks with IMF continue

Belgrade, 31 October 2005

Serbian Deputy Prime Minister Miroljub Labus said today that talks with the International Monetary Fund (IMF) have not been stopped. The negotiations will continue on issues on which agreement has not been reached so far.

Miroljub Labus

In a statement to the Tanjug news agency, Labus said that the IMF representatives noted that the economic atmosphere in Serbia is favourable, that the GDP growth rate is higher than expected, that there has been a reduction of the payment deficit and an increase in export, foreign currency reserves and the citizens’ foreign currency savings, as well as structural changes in companies in Serbia.

However, they have not reached an agreement on the inflation rate, which is currently higher than projected, and there is yet another challenge for Serbia, namely that the state should keep reducing its foreign debt, he said.

According to Labus, though progress has been made in the talks with the IMF, several issues still remain open, such as the interest rates.

“We wish to strengthen the dinar and dinar assets in relation to currency assets. Therefore we are now discussing a number of steps that could fortify the dinar, which will in turn affect the policy of interest rates”, he explained.

The Serbian government and the IMF representatives concurred on a policy of salaries in eight large public companies, though the total fund for salaries in these companies remains unclear because certain technical talks are still being carried out. The issue of settling the debt towards pensioners is also still unsolved.

“We want to start repaying these bonds in 2006, but the IMF thinks this will not be feasible until 2007”, Labus explained and said that the next steps for Serbia to take are to adopt the 2006 budget, proposed by the government, as well as the accompanying bills necessary for the realisation of the budget. The deadline for all of this is December 1, he added.

Labus said that pensions will be paid out on a regular basis, because the adoption of the budget enables the government to do that.

He stressed that despite the contradictory information that has been appearing in the public, there will be no currency depreciation. The government is considering other things that can be done in the banking system to help strengthen the dinar assets in relation to currency assets, Labus concluded.