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The Government of the Republic of Serbia

In the service of citizens

New IMF arrangement beneficial to Serbia

Belgrade/Washington, 18 April 2011

Serbian Prime Minister Mirko Cvetkovic stated that in their analyses of south east European economies, the World Bank and the International Monetary Fund (IMF) assess the situation in Serbia as stable, envisaging its economic growth in 2011 of up to 5%.

Cvetkovic, who is in attending a spring session of the IMF and the World Bank in Washington, said in an interview for today’s edition of Politika daily that Serbia still adheres to the growth projection of 3%, based on last year’s indicators, adding that the growth has surpassed projected figure since the beginning of the year.

For the time being, we only have the data on industrial output, which in January increased by around 4% and in February by more than 5%, which means there are grounds for making new projections, he said.

World Bank and IMF analysts believe that Serbia’s potential exceeds its projections, which will be taken into account during revisions for 2011.

Cvetkovic reached agreement with World Bank Managing Director Ngozi Okonjo-Iweala on a new four-year arrangement of $800 million, which implies a possibility to draw even additional funds.

The Prime Minister explained that a new feature of the arrangement is the approach to drawing these funds, specifying that one half will be used to cover the budgetary deficit and the other half for projects.

The funds for the budget are always used up, while those intended for projects met with certain obstacles due to our incapacity to process it all, he observed. Cvetkovic noted that several overdue projects have been stepped up, including those related to agriculture and drainage.

The continuation of cooperation with the IMF is highly beneficial for Serbia, although we are not in dire need of the money, and we have drawn only one half of the funds from the existing arrangement, Cvetkovic noted.

He voiced his expectation that during the next month, the new arrangement will be drafted, adding that this time it will not be related to the funds, but to a system of precautions, which implies joint defining of economic, fiscal and monetary policies.