Economists believe that we need their advice in order to make good decisions, but also to prevent greater spending.
The current advisory arrangement that Serbia has with the International Monetary Fund (IMF), popularly called the “guard house”, expires in January next year and there is no doubt that cooperation with this international financial institution will be renewed. The president of Serbia resolved the unknown with a statement that we will have a new arrangement because it is a question of security and a good position on the world financial market.
Serbian Prime Minister Ana Brnabic also pointed out that Serbia is interested in continuing cooperation with the International Monetary Fund even after the expiration of the current arrangement, emphasizing that such cooperation best promotes Serbia as an economically stable country and a desirable market for investment. She talked via video link with the head of the IMF delegation, Jan Kees Martein, about the current fifth arrangement “Policy Management Instrument” and about further possibilities for cooperation. The head of the IMF delegation pointed out the fact that Serbia does not need financial support and said that the next arrangements could be of an advisory nature.
Among economists, there are those who are for and against the new arrangement. Thus, Ivan Nikolic from the Institute of Economics believes that we do not need such an arrangement with the IMF. Serbia is close to the investment rating, and the arrangement “does not work” with the investment rating, that is, if we want to be in that category.
“The fact that a country has an arrangement with the IMF, even an advisory one, is a sign that it is not doing well and it associates that it needs at least some technical assistance. I do not know of any country with an investment rating that has an arrangement with the IMF. That doesn’t go well with each other,” says Nikolic.
He adds that we have a nice experience with this international financial institution, they also have a good experience with us and cite Serbia as an example of the success of the implemented arrangements. Nikolic believes that we have come out of the problem – yes, our deficit in the state treasury is deepening and the public debt is growing, but the origin of that is now completely different than before.
Ljubomir Madzar, a retired professor at the Faculty of Economics, says that it is good for us to agree on a new arrangement and that we should have it all the time. From the IMF comes good advice and recommendations that improve our economic policies, their approach is professional and expert. Besides, our reputation is a shade better when we have an arrangement, because investors have confidence in the IMF.
“The International Monetary Fund is good at preventing the mischief of the top government, which strives to increase salaries in the public sector and pensions. It is absurd and incomprehensible that in the year of economic decline of minus 1.5 percent, even if it is only stagnation, the mentioned increase occurs. The fact that we will be the only country in Europe that will increase salaries and pensions is not a positive exception, but a negative one,” says Madzar.
Branko Urosevic, a professor at the Faculty of Economics in Belgrade, believes that the new arrangement would be useful for several reasons.
“First, we do not know how long the crisis will last and what its consequences will be. The International Monetary Fund can help us stabilize public finances and make good decisions in that area. We must not repeat what was done after the crisis of 2008, when our deficit in the state treasury and public debt increased. As a controller, we need the International Monetary Fund not to get too carried away,” believes Urosevic.
He adds that our officials easily support the increase of salaries in the public sector and pensions, but that it must be done in a sustainable way.
“These are not easy decisions. On the one hand, we have a decline in the number of inhabitants and an aging population, and on the other hand, the need for pensions to be decent and to be able to make a living from them. The same goes for salaries. The increase of both must be sustainable, and not the result of great borrowing,” believes Urosevic.
His colleague from the Faculty of Economics, Milojko Arsic, says that it is still good for us to have an arrangement with the IMF, and that the advisory arrangement, such as the current one, which ends in January, is quite sufficient.
“For countries with our characteristics, the arrangement is needed because of the investors, because then their trust is higher. Investors trust the IMF more than the government. We also need the arrangement because of our worsened rating according to one of the criteria of the World Bank, and that is the quality of management by the state. There is a slight deterioration in terms of efficiency of the state, control of corruption, rule of law,” says Arsic, Politika reports.
