The International Monetary Fund (IMF) mission which ended its visit to Belgrade on Tuesday said that Serbia is seeing robust growth with a declining debt.
“Growth is robust, public debt is declining, inflation is low and stable, and many key reforms have been implemented,” the mission’s concluding statement said and warned that available fiscal space should be used for capital spending with rigorous selection and appraisal procedures to contribute to sustained growth.
“Key requirements to support medium-term growth include building a workforce that can fully participate in the modern economy, improving the business environment, and strengthening corporate governance of state-owned institutions,” the mission, headed by Jan Kees Martijn, said in its statement published on the IMF web site
Serbian Finance Minister Sinisa Mali told a news conference at the end of the IMF mission’s visit that no agreement had been reached on raising electricity prices because of what he said were disagreements over the level of the price rise.
“We enjoyed constructive discussions on the 2019 Article IV Consultation and reached staff-level agreement on policies needed to complete the second review under the Policy Coordination Instrument (PCI). The program remains broadly on-track with all end-March 2019 quantitative targets met. Most reform targets have been implemented, although some with delays. The agreement is subject to approval by IMF Management and Executive Board. Consideration by the Executive Board is tentatively scheduled for mid-July,”it said and warned that maintaining a balanced policy mix is crucial to promoting sustainable expansion.
According to the IMF mission, the near-term outlook remains positive with growth projected at 3.5 percent in 2019 and inflation within the lower half of the inflation target band, while the current account deficit as a share of GDP is expected to widen modestly and remain fully covered by foreign direct investments (FDI). It said that the recent relaxation of fiscal policy and the Serbian National Bank (NBS) “accommodative monetary policy stance” remain appropriate.
The IMF mission said that the brain drain could be limited by ensuring opportunities for skilled workers and added that improving public services and cutting down the gray economy to improve the private investment climate should be priorities for the government.
The statement said that fiscal achievements need to be better anchored to preserve hard-won gains, while also supporting private sector growth, adding that strong governance is critical, including anti-corruption efforts and providing legal certainty, along with improving the management of state-owned enterprises to raise economic growth.