This is what Serbia promised to the IMF

The answer to the question of why the Serbian state authorities have suddenly launched the bankruptcy procedure in the public enterprise Azotara (nitrogen plant) is found in the agreement that the authorities signed with the International Monetary Fund (IMF).

Namely, this was a condition, set by the Board of Directors of this financial institution, to approve a new arrangement for Serbia, i.e. the Policy Coordination Instrument (PCI). As it can be seen from this document, signed by the National Bank of Serbia Governor Jorgovanka Tabakovic, Finance Minister Sinisa Mali and Prime Minister Ana Brnabic, during the next 30 months, which is how long the programme will last, Serbia has committed itself to a number of specific goals, which are all time-defined.

Thus, for example, another requirement for the Board of Directors was for Serbia to call a tender for hiring a consultant to oversee the tax administration reform process, which should be completed by the end of 2023. As the Politika finds out, the tender was launched on 13th July, only a few days before the IMF’s Board of Directors approved the PCI. The deadline for submitting bids expires on 13th August. Also, there is a plan about what steps that fiscal authorities will have to fulfill in the meantime, with the view of the Tax Administration having a new organizational structure in place by June next year.

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At first glance, it seems that all the delays in structural reforms during the first standby arrangement, which Serbia ended in February this year, will now have to be resolved without a delay. The PCI defines strict deadlines regarding the state-owned enterprises settling their liabilities.

The tender for RTB Bor has already been launched, and tomorrow the state authorities are supposed to launch a public call for submission of bids to privatize PKB. The programme defines July as the deadline for this tender. The previous arrangement with the IMF also set the same requirement, with the June deadline, but the Serbian side failed to honour it.

The document further states that, by the end of August, in cooperation with the World Bank, an analysis of the possible increase in electricity price will be completed. When it comes to EPS, it is expected that in 2020, this company will change its status into a joint-stock company. In September, the Ministry of Economy is expected to announce a tender for MSK and Petrohemija. By the end of the year, the state will have to start closing down two unprofitable mines in Resavica, which was our obligation from the previous arrangement with the IMF. At the same time, the social programme will also be offered to the workers.

Furthermore, the arrangement envisages making an official decision to privatize Komercijalna Banka by the end of February next year. The tender for privatization will be announced in June 2019. According to the PCI, Komercijalna Banka should have a private owner by the end of next year.

The programme also states that a new strategy for Postanska Stedionica is being written in cooperation with the World Bank, according to which Stedionica will direct its placements to the general population, entrepreneurs, micro and small enterprises. The plan is also to improve the internal organization of the bank, as well as provide a better risk management.

It is expected that the reform of the public sector salaries system should be completed during thie duration of the IMF programme. The end of September is the deadline for adoption of a regulation on salary brackets which is needed to finally start the implementation of the Law on the Public Sector Salary System from next year. This regulation was adopted at the beginning of 2016, but its application has so far been postponed twice.

In all likelihood there will be some changes when it comes to tax policy. Consideration will be given to reducing the wage tax, as well as the profit tax. It is also planned to revise the lump-sum taxation method, but it is not stated in what way.

The document also mentions the resolution of the status of 114 companies, from the former Privatization Agency’s registry, which employ 45,000 workers, but the deadline for completing this task has not been stated.

Sebastian Sosa, head of the Serbian office of the World Bank, said yesterday that the new programme, which will last 30 months, will have regular semi-annual audits. This means that the IMF mission will visit Belgrade twice a year.

“The goal of the new programme, which does not involve financial support, is to establish and consolidate the macroeconomic and fiscal results achieved over the past three years,” Sosa concluded.

(Politika, 24.07.2018)



This post is also available in: Italiano

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