IMF fails to authorize non-financial arrangement with Serbia? – Agreement on new program expected this summer

The staff team of the International Monetary Fund (IMF), led by James Roaf, didn’t reach agreement with the Government of Serbia about the new, non-financial arrangement, Politika learns.

The negotiations are expected to be completed in June, and the newspaper cites unofficial information saying that the arrangement is agreed in principle only and that a final agreement cannot be reached at the moment for procedural reasons.

The main reason, as Politika’s source says, is that, following the resignation of Dusan Vujovic, Serbia doesn’t have a minister of finance, which is why the IMF Board of Directors cannot approve the program, officially called the Policy Coordination Instrument (PCI).

The parties agreed on everything else, but the IMF recommended to the government to find a legal way to solve the problem with the Law on Temporary Reduction of Pensions.

For this reason, the mission will return to Belgrade in June in order to conclude the started negotiations. Serbia is expected to get a new finance minister in the next 15 days. The procedure of this financial institution is such that a program cannot be approved for the country in question if it has a resigning finance minister.

The talks with the Serbian authorities were productive and agreement was reached on key policy elements of the new program, and the IMF team intends to return shortly to finalize the discussions once the new Finance Minister has taken office, the head of the IMF mission, James Roaf, said.

– During the mission, we continued the very productive discussions with the authorities on their economic reform program, to be supported by the IMF with a Policy Coordination Instrument – Roaf said in a written statement at the conclusion of the two-week visit to Serbia.

The head of the IMF mission also points out that, following the successful completion of the 2015-18 program, the Serbian economy continues to expand at a healthy pace.

The cabinet of Serbian President Aleksandar Vucic announced that the new arrangement might be signed in the summer.

Vucic talked with the IMF mission, about the previous three-year arrangement, which expired in February 2018, as well as about the new one and the raising of pensions and salaries in the public sector.

As announced, Vucic said that he was prepared to discuss potential solutions for the raising of pension with Prime Minister Ana Brnabic, such as would be satisfactory to all pensioners.

The IMF expects the growth to reach at least 3.5% in 2018, the press release says and adds that Vucic emphasized that the growth was based on investments, export and consumption.

A potential increase in the capital investments budget for the next year was also discussed, as the IMF estimates that Serbia will realize a considerable surplus this year as well.

Joint efforts on the completion of the process of privatization of big companies such as RTB Bor, Perohemija and MSK were also agreed, as was the completion of the process of privatization or the finding of strategic partners before the end of this year.

It was previously announced that the new program with the IMF, which would be advisory and not financial, would be implemented in the summer of 2018.

Međunarodni monetarni fond-MMF Beograd

Vlada Republike Srbije

Ministarstvo finansija Republike Srbije

Mission of the International Monetary Fund

James Roaf

non financial arrangement

non financial arrangement with IMF

arrangement with IMF

Dusan Vujovic

Policy Coordination Instrument

PCI

Law on Temporary Reduction of Pensions

Aleksandar Vucic