Keepin touch

Whether you have a question, comment, suggestion or any problem in the purview of the government, send us your message and we will try to respond as soon as possible. If your problem is not in our purview, we will forward your message to the relevant institution.

The Government of the Republic of Serbia

In the service of citizens

Negotiations between Serbia, IMF on third revision of stand-by arrangement finish successfully

Belgrade, 23 February 2010

Minister of Finance Diana Dragutinovic said today that negotiations between the International Monetary Fund (IMF) Mission and Serbia on the third revision of the stand-by arrangement have been successfully completed.

Albert Jaeger

Dragutinovic told a news conference that an agreement has been reached on pension reform in Serbia, which will follow the dynamics of salaries in the public sector.

The Minister also announced the passing of a new pension law.

Head of IMF Mission Albert Jaeger said that the Serbian government complied with the agreement reached in the stand-by arrangements and announced that the final evaluation on the third revision of the arrangement will be adopted by the Board of Directors in late March. Jaeger stated that if the Board of Directors makes a positive assessment, Serbia will be able to withdraw a new tranche of €350 million from the stand-by arrangements for strengthening foreign exchange reserves. The Head of IMF Mission said that Serbia expects a growth of 2% in GDP for 2010 and a growth of 3% for 2011.

He said that the economic crisis showed that Serbia cannot afford to go back to an economy based on large consumption, low domestic savings and low exports.

From left: Diana Dragutinovic, Mladjan Dinkic and Jovan Krkobabic

Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic said that an agreement was reached with the IMF to freeze pensions and salaries in the first half of 2010, but added they agreed there will be room for talks about unfreezing them in the second half of the year if the economy starts recovering faster than currently projected.

Dinkic announced that this will be discussed in detail in May during the IMF mission’s next visit, adding that IMF representatives affirmed that 2010 is the year when the recession will end and raised Serbia’s economic growth projection from 1.5% to 2%. Dinkic stated that it was also agreed with the IMF not to change taxes, such as VAT and income tax.

The Deputy Prime Minister said that Serbia fulfilled everything it had agreed upon with the IMF, adding that the agreement will secure stability for further recovery of the Serbian economy and serves as a good signal for foreign investors. Deputy Prime Minister Jovan Krkobabic said that an agreement was reached with the IMF mission regarding the pension system reform, the implementation of which will begin on April 2011. He recalled that it envisages the synchronisation of pensions with salaries based on the increase of salaries in the public sector. Krkobabic said that an agreement was reached, but the final decision will be made during the IMF mission’s visit in May.