The executive board of the International Monetary Fund (IMF) said on Thursday it has successfully completed the combined fourth and fifth reviews of Serbia’s economic performance under the Stand-By Arrangement (SBA), making available the cumulative amount of 761.6 million euro ($847.9 million) to the country.
The Serbian authorities have indicated their intention to continue treating the arrangement as precautionary, the IMF said in a statement following the mission.
The executive board of the fund noted that Serbia’s economic recovery has exceeded expectations, supported by efforts to strengthen public finances, advance structural reforms, and boost investment confidence. However, it warned that vulnerabilities remain, including from elevated public debt and lingering structural challenges in an uncertain external environment.
“The challenge is to sustain the fiscal adjustment to place the high public debt firmly on a downward path. The completion of the first phase of public sector rightsizing will help contain the public sector wage bill in 2016, and further optimization will be guided by in-depth functional analysis”, Tao Zhang, deputy managing director and acting chair, said in the release.
He explained that it is also critical to implement the reform agenda of the state-owned financial institutions to reduce financial vulnerabilities and fiscal risks.
“Decisive implementation of the identified structural reforms is essential for reducing fiscal risks and supporting competitiveness and growth. While there has been good progress, full implementation of state-owned enterprise restructuring and resolution plans is needed to avoid further increase of fiscal risks and to achieve the program objectives”, Zhang concluded.
In February 2015, the IMF approved a 1.2 billion euro SBA that aims to help Serbia restore public finances’ health, increase the stability and resilience of the financial sector and implement comprehensive structural reforms.
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