Serbia Seeks Deal, Not Loan from IMF

06 November 2008 Belgrade – Serbia’s government wants to make a key cooperation deal with the International Monetary Fund, the country’s Deputy Prime Minister Bozidar Djelic said.

“Entering that programme would be the best recommendation for investments in Serbia. That is in our best interests and we are not asking the IMF for loans,” Djelic told state state-run RTS Television.

Earlier this week, the IMF team which is in Serbia to help local experts draft the 2009 budget, warned government that the country’s economic growth will drop to 3.5 percent in 2009 from the current 7 percent.

It also said that the budget deficit will amount to 50 billion dinars (€588.8 million).

Djelic said Serbia “will join the IMF programme by the end of the week.”

“The problem is that Serbia’s spending is 20 percent higher than its production and the IMF has already warned us about that,” Djelic said.

The IMF delegation headed by Albert Jaeger also warned Serbia it must cut spending in 2009 and give up a planned increase to pensions of up to 70 percent of the average wage.

The kind of deal Serbia is seeking with the IMF is called a Precautionary arrangement which serves to boost international confidence in a member’s policies. However the signatory countries states that does not intend to use the fund’s resources.

Precautionary arrangements are useful in signaling the IMF’s endorsement of a member’s policies and boosting confidence in them.

Djelic offered no precise details about the precautionary deal Serbia has signed.