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IMF approves standby agreement
Washington/Belgrade,
17 January 2009
The IMF has approved a €402.5 million standby agreement with Serbia to support the Serbian government’s efforts to maintain macroeconomic and financial stability during the global financial crisis.
According to a statement by the IMF the 15 month arrangement envisages that Serbia can draw on the funds if it needs financial support and the Serbian government has immediate access to €268.4 million.
The arrangement envisages a restrictive monetary policy, a 2009 budget deficit of less than 1.75% GDP, inflation controls and the continuation of structural reforms for strengthening economic growth and development.
The measures in the programme include limitations on pensions and wage rises in the public sector and expenditure cuts, which will help secure funds for increasing infrastructure investments.
The framework conditions for target inflation will be strengthened while the floating rate of the domestic currency will be maintained and the accumulated reserves of the financial sector will be used to meet the challenges posed by the financial crisis.
On the macroeconomic level it is expected that Serbia will experience a decrease in the influx of foreign capital and domestic loans, which will reduce domestic demand and inflation but also decrease foreign deficit.
The Serbian government has planned a 3.5% GDP growth for 2009 with accelerated growth in 2010, while the planned inflation rate for this year is nearly 8%.
IMF Deputy Managing Director Murilo Portugal stated that the Serbian government’s programme is a suitable response to the new challenges and will preserve macroeconomic and financial stability through all inclusive measures.
He said that Serbia must establish economic balance by slowing credit expansion and domestic demand because of the effects of the global financial crisis on the Serbian market.
He said that consistent implementation of the programme will make it possible for Serbia to continue with a balanced and viable growth.
He said that Serbia must go on with the privatisation process and the restructuring of its economy but must reduce business expenses in order to expand the private sector.
Authorities in Serbia have started implementing the programme, which gives confidence that with the help of the international community the Serbian economy will succeed in overcoming current difficulties, said Portugal.
According to the arrangement with the IMF Serbia has special drawing rights worth €350.8 million, which is75% of Serbia’s quota.
The agreement on the new arrangement with the IMF was reached in the November last year and the condition for its approval was that the Serbian government and the National Bank of Serbia sign an agreement which establishes responsibility for controlling prices and maintaining stability in the Serbian financial sector.
The arrangement envisages a restrictive monetary policy, a 2009 budget deficit of less than 1.75% GDP, inflation controls and the continuation of structural reforms for strengthening economic growth and development.
The measures in the programme include limitations on pensions and wage rises in the public sector and expenditure cuts, which will help secure funds for increasing infrastructure investments.
The framework conditions for target inflation will be strengthened while the floating rate of the domestic currency will be maintained and the accumulated reserves of the financial sector will be used to meet the challenges posed by the financial crisis.
On the macroeconomic level it is expected that Serbia will experience a decrease in the influx of foreign capital and domestic loans, which will reduce domestic demand and inflation but also decrease foreign deficit.
The Serbian government has planned a 3.5% GDP growth for 2009 with accelerated growth in 2010, while the planned inflation rate for this year is nearly 8%.
IMF Deputy Managing Director Murilo Portugal stated that the Serbian government’s programme is a suitable response to the new challenges and will preserve macroeconomic and financial stability through all inclusive measures.
He said that Serbia must establish economic balance by slowing credit expansion and domestic demand because of the effects of the global financial crisis on the Serbian market.
He said that consistent implementation of the programme will make it possible for Serbia to continue with a balanced and viable growth.
He said that Serbia must go on with the privatisation process and the restructuring of its economy but must reduce business expenses in order to expand the private sector.
Authorities in Serbia have started implementing the programme, which gives confidence that with the help of the international community the Serbian economy will succeed in overcoming current difficulties, said Portugal.
According to the arrangement with the IMF Serbia has special drawing rights worth €350.8 million, which is75% of Serbia’s quota.
The agreement on the new arrangement with the IMF was reached in the November last year and the condition for its approval was that the Serbian government and the National Bank of Serbia sign an agreement which establishes responsibility for controlling prices and maintaining stability in the Serbian financial sector.
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