IMF Staff Concludes Visit to Serbia
IMF News, February 28, 2020
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- Published: February 28, 2020
Mission summary and timing
- IMF mission led by Jan Kees Martijn visited Belgrade during February 24–28, 2020 to evaluate the 2019 outturn, assess progress under the Policy Coordination Instrument (PCI), and discuss policy priorities for 2020.
- A full mission for the fourth review under the PCI is planned for the second half of May.
Macroeconomic assessment and outlook
- 2019 performance:
- Growth estimated at 4.2 percent.
- Inflation, at 2 percent in January, remains in the lower half of the target band.
- Non-performing loans fell to 4.1 percent in December 2019.
- The general government posted a fiscal deficit of 0.2 percent of GDP in 2019, consistent with PCI targets.
- Public debt declined to about 52 percent of GDP.
- Unemployment declined to historically-low levels, with steady growth of wages.
- Growth was supported by strong foreign direct investment and booming construction activity.
- 2020 outlook:
- Growth projected at 4 percent.
- Inflation expected to stay within the lower half of the target band.
- Risks are elevated, especially on the external front.
Progress on PCI commitments and structural priorities
- The mission assessed progress in implementing the Policy Coordination Instrument (PCI) and stressed the need to fully implement committed reforms to cement macroeconomic gains and boost growth potential.
- The mission welcomed authorities’ efforts to complete the privatization of Komercijalna Banka and stressed the importance of privatizing HIP Petrohemija.
- Preparations assessed to implement the new public wage system and to move to a new, more structured public employment framework in 2021.
Financial sector and fiscal governance
- The mission noted improving resilience of the financial sector, with non-performing loans at 4.1 percent in December 2019.
- Fiscal performance was characterized as strong, with a 2019 general government deficit of 0.2 percent of GDP and public debt around 52 percent of GDP.
- The mission supported recent efforts to properly monitor fiscal risks and discussed options to enhance fiscal rules.
- Emphasized importance of strengthening the governance of state-owned enterprises to improve efficiency and the quality of public services.
Policy recommendations and priorities
- Fully implement reforms committed under the PCI to cement macroeconomic gains and boost growth potential.
- Complete privatization of Komercijalna Banka and privatize HIP Petrohemija.
- Implement the new public wage system and transition to a new public employment framework in 2021.
- Enhance monitoring of fiscal risks and consider options to strengthen fiscal rules.
- Strengthen governance of state-owned enterprises to improve efficiency and public service quality.
Source: Press Release No. 20/74, February 28, 2020 (International Monetary Fund).
Content in this bundle
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