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IMF approves fourth review of stand-by arrangement with Serbia

Belgrade/Washington, 29 June 2010

The Executive Board of the International Monetary Fund (IMF) has approved the fourth review of the stand-by arrangement with Serbia, allowing for a disbursement in the amount of €383 million.

The IMF said in a statement that its Deputy Managing Director and Acting Chair Murilo Portugal explained that the funds are intended to serve as support to foreign currency reserves. He noted that Serbia’s economic performance continues to be broadly satisfactory, in spite of a weaker macroeconomic environment during the first half of 2010. Serbia’s external financing position has improved markedly, the reserve position is broadly comfortable, and inflation remains in check, Portugal outlined and added that notwithstanding these positive developments, Serbia remains vulnerable to adverse financial spillovers from the region.

Portugal stated that the authorities in Serbia remain strongly committed to the structural reform agenda aimed at improving the business environment, promoting private investment, and enhancing the country’s export capacity, including through privatisation and upgrading of infrastructure. If Serbia draws the entire fourth instalment of the loan, it will use €1.8 billion out of the total of €3.14 billion from the current stand-by arrangement with the IMF, it is concluded in the statement from the IMF.

The National Bank of Serbia (NBS) confirmed that it will draw about €56 million from the IMF tomorrow, or 15% of the funds available instead of the full amount of the fourth tranche.

In accordance with the Memorandum of Understanding between Serbia and the IMF, the NBS has made this decision, starting from a stable level of foreign exchange reserves and the need to minimise the cost of credit arrangements.

This will make the total disbursements so far used under this arrangement amounting to approximately €1.47 billion, or 263% of Serbia’s quota in the IMF.

In addition, the NBS has the option to withdraw the remaining funds from the fourth tranche at any time, if deemed necessary for the implementation of the programme with the IMF and agreed economic policy, the NBS statement added.