IMF completes sixth review under Stand-By Arrangement with Serbia and approves €373 million disbursement

The Executive Board of the International Monetary Fund (IMF) has completed the sixth review of Serbia’s economic performance under the program supported by a Stand-By Arrangement (SBA), enabling the immediate disbursement of SDR 319.595 million (about €373 million).

Mr. John Lipsky, First Deputy Managing Director and Acting Chair, said:

-The Serbian authorities’ implementation of the IMF-supported program has been broadly satisfactory, and an export-led recovery has gained momentum. Continued vigilance will be critical as macroeconomic stability risks have increased, including from a surge in inflation, continued high trade deficits, and potential adverse spillovers from regional developments.

Lipsky added that the authorities had appropriately tightened monetary policy in line with the inflation-targeting framework.

With inflation risks remaining tilted on the upside, as he pointed out, the authorities should continue to use all tools available to contain inflation expectations and bring inflation back within the National Bank of Serbia’s tolerance band.

Lipsky stated that the fiscal policy had remained in line with the program and that the 2011 budget targeted a deficit consistent with the new fiscal responsibility framework.

The Government of Serbia has forwarded the 2011 draft budget to the Parliament, according to which the deficit of the consolidated budget of Serbia should amount to 4.1% of the gross domestic product (GDP), that is, about RSD 140 billion.

The IMF stressed that "determined efforts will be needed to achieve the 2011 fiscal targets, in view of growing pressures for higher spending".

Međunarodni monetarni fond-MMF Beograd

Narodna banka Srbije Beograd

Vlada Republike Srbije

MMF

John Lipsky

NBS

fiscal policy