## Serbia Completes Successful IMF Program

_IMF News, February 22, 2018_

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## Bibliographic details
- Authors: Arrangement Reforming
- Published: February 22, 2018

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### Program outcome and overview
- Serbia exits a $1.32 billion three-year program with the IMF on February 22, after outperforming several of its goals.
- The IMF characterizes the program as having “done much better than expected, overperforming many of its macroeconomic goals.” — James Roaf, head of the IMF’s Serbia team.
- Concluding the program is described as “only the first step” toward building a strong and vibrant economy able to compete globally.

### Economic turnaround and recent performance
- In 2014 Serbia’s economy was in serious trouble following the 2008 global financial crisis: stagnation, weak public institutions, collapsing tax receipts, and overspending by government and state-owned enterprises led to a rapid buildup of public debt.
- Authorities adopted an ambitious program of fiscal adjustment, financial sector strengthening, and broad-based economic reforms; the IMF provided economic advice, monitoring, and precautionary financing.
- After three years under the program:
  - The fiscal accounts moved from having the second-largest deficit in Europe in 2014 to boasting a surplus in 2017.
  - Growth has returned, coupled with rising investment and employment.
  - Economic confidence has improved with stronger investment both from foreign and domestic sources.
  - Unemployment is near historic lows, and falling.
  - Banks are solid, and nonperforming loans are now below their precrisis levels.

### Remaining challenges and priority reforms
- The IMF emphasizes the need to deepen reforms post-program to reach Serbia’s full potential and to prevent the exodus of skilled workers to Western Europe.

- Reform institutions and public services:
  - Strengthen institutions to support private-sector-led growth.
  - Modernize tax administration and public services such as education and health.
  - Improve efficiency of public services to enhance social protection.
  - Develop financial markets and promote broader use of the Serbian dinar instead of the euro.
  - Increase labor market participation—especially of women—and reduce informality.
  - Implement wide-ranging reforms to address the large gray economy.

- Overhaul state-owned enterprises:
  - Noted successes: restructuring of the railway company, improved debt collection in main electricity and gas companies, privatization of Smederevo steelworks.
  - Remaining state-owned enterprises in need of reform or resolution include:
    - Resavica coal mine
    - RTB Bor copper complex
    - Petrohemija
    - MSK
    - Azotara
  - Several state-owned financial institutions also need reform or privatization, including BPS and Komercijalna banks and Dunav insurance company.

- Improve the business climate:
  - Progress has attracted more investors due to better economic stability and stronger regulation.
  - Constraints that still limit business investment and expansion:
    - Tax and regulatory systems
    - Multiple fees and charges
    - Delays and uncertainty in the judicial system

- Build better infrastructure:
  - Upgrading road, telecommunications, and energy networks is essential to propel Serbia toward a standard of living that rivals that of Western Europe.

*Serbia Completes Successful IMF Program — February 22, 2018, International Monetary Fund*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF report](http://www.imf.org/en/Publications/CR/Issues/2017/12/21/Republic-of-Serbia-Eighth-Review-Under-the-Stand-By-Arrangement-Press-Release-Staff-Report-45506)
- [Stand-By Arrangement](http://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/20/33/Stand-By-Arrangement)
- [Reforming the Judiciary in Central, Eastern, and Southeastern Europe](http://www.imf.org/en/Publications/REO/EU/Issues/2017/11/06/Eurreo1117)
- [Central, Eastern, and Southeastern Europe: Harnessing the Power of Good Governance (blog)](https://blogs.imf.org/2017/07/27/central-eastern-and-southeastern-europe-harnessing-the-power-of-good-governance/)
- [Public Infrastructure in Western Balkans: A Highway to Higher Income](http://www.imf.org/en/News/Articles/2018/02/01/na020818-public-infrastructure-in-the-western-balkans-a-highway-to-higher-income)
- [Serbia’s Economic Program Aims to Support Growth and Job Creation (2015)](http://www.imf.org/en/News/Articles/2015/09/28/04/53/socar030315b)
- [Serbia and the IMF](http://www.imf.org/en/Countries/SRB)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2018/02/21/na022218-serbia-completes-successful-imf-program_