Jelašić expresses moderate optimism on success of negotiations with IMF

(Radovan Jelašić)

The Governor of the National Bank of Serbia (NBS), Radovan Jelašić, said today that he was moderately optimistic that the talks with the International Monetary Fund (IMF) would be successful.

- Just like in the previous nine years, there are some contractual obligations that remained unfulfilled before the arrival of the IMF Mission and need to be discussed - he said to the press in NBS.

The representatives of Serbia and IMF started the two-week talks today about the third revision of the credit stand-by arrangement worth 2.9 billion EUR and general economic situation in Serbia.

During the regular third revision of current credit arrangement, the IMF delegation will also also assess both mid-term and long-term economic and macroeconomic situation in Serbia - said Jelašić.

He said that the central issues within the next two weeks would be public consumption reduction and investment growth, that is, the growth of production and export. The Governor pointed out that, in the agreement with IMF, the Government had taken on the obligation to reform the pension system and cut the budget expenses for payment of salaries to budget users.

According to his words, the expert teams of the Government and IMF will be discussing these issues a lot during the next two weeks. One of the central issues, as Jelašić explained, will be the monetary policy and the plans of NBS regarding reduction of the banks' mandatory reserves, as well as further activities related to the Vienna Agreement on the credit activities of banks in Serbia.

Jelašić announced that the meeting occasioned by the revision of that Agreement would be held in Vienna on February 26th, and he expressed the hope that successful negotiations with IMF would help Serbia reach better agreement in Vienna.

If the IMF's report is positive, Serbia should withdraw the new, third tranche of 350m EUR from the current credit arrangement in May 2010.

- We hope that we will not need the rest of the funds from the loan because additional interest rate of 2% must be paid on them - said Jelašić.

- The representatives of IMF stated that the Government's measures alleviated the negative consequences of the economic crisis in Serbia in 2009 and that our country ended the year with better macroeconomic indexes than the country of East Europe - it is stated in the announcement.