IMF Mission Arrives in Serbia Today

SERBIA

An IMF mission arrives in Belgrade on Monday to review whether Serbia has met the requirements of a €2.92 billion IMF standby loan approved in April.

The IMF delegation, headed by Albert Jaeger, is set to meet Serbian Prime Minister Mirko Cvetkovic, Finance Minister Diana Dragutinovic and Labour and Social Policies Minister Rasim Ljajic.

The Serbian government was forced to seek the loan in order to maintain fiscal stability. Its disbursement is conditioned on Serbia’s deficit not exceeding 3 per cent of GDP. 

Serbian government officials now want the IMF to approve an additional deficit expansion of 1.5 percent of GDP, offering cuts in the public sector in return. They also want to use part of the loan to plug budget gaps.

An IMF representative in Serbia, Bogdan Lissovolik, speaking to daily Danas last week, said that the IMF will ask the Serbian government to institute balanced and credible measures to secure fiscal sustainability.

Serbian President Boris Tadic said last week that Serbia will propose a new package of measures dealing with public expenditure and administration cuts in the talks.

“We need […] to rearrange public spending,” Tadic acknowledged, in comments carried by Fonet news agency.

He added that the best policy alternatives involve investing in the economy and creating productive workplaces. There are thousands of unnecessary positions in the Serbian administration, Tadic stressed.

Cvetkovic confirmed to daily Blic last week that the government is not entering the talks with a proposal to increase VAT or income tax rates, but will propose the full reform of the public sector.

Dragutinovic considers raising taxes on salaries over €400 to be the best solution, daily Press reported last week.

During their ten-day visit to Serbia, the IMF officials are also scheduled to meet representatives of the private sector and academics.