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Publication Date:
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February 26, 2015
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Electronic Access:
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Free Full text
(PDF file size is 2,723KB).
Use the free
Adobe Acrobat Reader
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Summary:
Context. Serbia is facing a weak economy, serious fiscal imbalances, and protracted structural challenges. The new government appointed in 2014 has a window of opportunity to address these issues, with support from a new Fund program. Fiscal policy. Strong fiscal consolidation over the program period—largely based on curbing mandatory spending and reducing state aid to state-owned enterprises (SOEs)—is needed to put public debt on a downward path. These measures will be supported by strengthening public financial management (PFM). Monetary and exchange rate policy. The inflation targeting framework is appropriate and the flexible exchange rate should remain an important shock absorber. Fiscal consolidation creates room for gradually easing monetary policy. Financial sector policy. The financial sector has remained broadly resilient, but special diagnostic studies are necessary to gauge potential capital shortfalls and establish a consistent baseline for financial sector policies under the program. The high level of non-performing loans (NPLs) is a major challenge requiring a comprehensive strategy. Structural reforms. Broad-based structural reforms, notably to improve the business environment and resolve loss-making SOEs, should foster Serbia’s medium-term growth potential and reduce fiscal risks. Program modalities. The proposed program supports the authorities’ medium-term policy goals to restore fiscal sustainability, bolster growth, and boost financial sector resilience. The authorities request a precautionary 36-month Stand-By Arrangement (SBA) with access of SDR 935.4 million (200 percent of quota, or about €1,122 million). Staff support the request and believe that this program will underpin Serbia’s resilience against adverse shocks that could give rise to a balance of payments need.
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Order a print copy
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Series:
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Country Report No. 15/50
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Subject(s):
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Article IV consultation reports | Fiscal policy | Fiscal reforms | Monetary policy | Economic indicators | Letters of Intent | Debt sustainability analysis | Staff Reports | Press releases | Stand-by arrangement requests | Serbia
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English
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Publication Date:
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February 26, 2015
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ISBN/ISSN:
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9781498369367/1934-7685
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Format:
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Paper
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Stock No:
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1SRBEA2015001
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Pages:
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109
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Price:
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Please address any questions about this title to
publications@imf.org
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