On 18th July, the Executive Board of the International Monetary Fund (IMF) approved a new Policy Coordination Instrument (PCI) for Serbia.
As said in the press release by the National Bank of Serbia (NBS), the programme will build on the precautionary Stand-By Arrangement successfully completed in February 2018 and aims at maintaining macroeconomic and financial stability and advancing an ambitious structural and institutional reform agenda to foster rapid and inclusive growth, job creation and improved living standards.
The arrangement is approved for a period of 30 months, and five programme reviews will take place on a semi-annual fixed schedule.
The PCI is a non-financing tool open to all members of the IMF. It enables them to signal commitment to reforms and catalyze financing from other sources. The PCI is available for all IMF members that do not have overdue financial obligations to the IMF.
As the NBS reports, the IMF Executive Board assesses that Serbia has succeeded in addressing macroeconomic imbalances and restoring confidence.
The confidence instilled by the improved macroeconomic situation has been reflected in rising investment, both from foreign and domestic sources, and supports an economic recovery, the press release specifies.
The IMF Executive Board points out that the economic outlook of Serbia remains positive. Nonetheless, Serbia remains susceptible to spillovers from regional and global developments and market volatility. It is pointed out that, on the domestic front, delay in delivering on structural reforms, or erosion of fiscal discipline, could undermine confidence and reduce medium-term growth prospects.
The IMF assesses that the National Bank of Serbia’s (NBS) current state-contingent monetary policy stance remains appropriate in light of the domestic and external environment. The PCI aims to further strengthen coordination of liquidity management and promote dinarization.
Structural and institutional reforms focus on improving the business environment, contributing to the process of EU accession. The reforms will focus on restructuring of state-owned utilities, finance institutions and the public administration, as well as on tackling the large shadow economy, the NBS press release says.
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