IMF Announces Staff Level Agreement with Serbia on a US$518 Million Precautionary Stand-By Arrangement

Press Release No. 08/289
November 17, 2008

Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), made the following statement today:

"An IMF staff mission and the Serbian authorities reached agreement, subject to approval by IMF Management and the Executive Board, on an economic program supported by an SDR 351 million loan (about US$518 million) under a 15-month precautionary Stand-By Arrangement (SBA). In view of Serbia's comfortable international reserve position and continued access to external financing, the arrangement is being considered under regular, not exceptional, procedures and access limits. The Serbian authorities do not intend to draw on the resources made available under the arrangement unless the need arises.

"The global financial turmoil has begun to spill over to Serbia, and this abrupt shift in the international environment is likely to slow down credit flows and economic activity across the region. While the banking sector's capital and liquidity buffers are substantial and should help weather the financial headwinds, strong policies will be important to maintain investor and market confidence.

"The authorities have designed a strong and comprehensive program. The proposed SBA is intended to support the policies aimed at maintaining macroeconomic and financial stability. These involve fiscal restraint, with a deficit limited to 1½ percent of GDP next year; monetary policy focused on containing inflation; financial sector measures to preempt and, if necessary, react to possible threats to stability; and structural reforms to boost the economy's growth and export potential," Mr. Strauss-Kahn said.



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