Professor at the Faculty of Economics in Belgrade, Ljubodrag Savić, says that Serbia’s new financial arrangement with the International Monetary Fund (IMF) is welcome because the situation with the state budget is not as good as it is portrayed.
“Regardless of the fact that I have objections to the way international financial organizations work, including the IMF, now that Serbia and the whole world is in a crisis with no end in sight and when inflation is growing, IMF’s only advisory assistance but rather we need a financial one to overcome the problems more easily”, Savić says for Beta news agency.
He adds that the indicators that show the state of the Serbian economy are still good compared to other countries, but that we should not only look at the share of public debt in the gross domestic product (GDP) and claim that it is below the Maastricht criterion of 60%.
Savić adds that it is not only the amount of debt that is important, but also the ability of the economy to pay it back and that many countries do not care whether they adhere to the Maastricht criteria or not, so for example Germany’s debt has long exceeded 100% of its GDP, Italy’s 150%, and Japan’s 220%.
Serbian Finance Minister Siniša Mali confirmed yesterday that an agreement was reached with the IMF on a future stand-by arrangement for Serbia that would last two years and will amount to EUR 2.4 billion.
Professor Savić warns that the Serbian government has been carelessly spending state funds in the past two or three years, due to the good economic indicators but the question remains how good those indicators really were.
He points out that concluding an arrangement with the IMF confirms that the state of public finances is not as good as Finance Minister Sinisa Mali claims.
“If the state budget was in good shape, they (the government) would not need a loan from the Arabs and the IMF”, Professor Savić adds.
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