An International Monetary Fund (IMF) mission, led by James Roaf, visited Belgrade during September 13-19, 2017 to initiate discussions on the 2018 budget and discuss progress in the implementation of structural reforms. A full mission for the eighth and final review under Serbia’s precautionary Stand-By Arrangement with the IMF is planned for late October and early November. At the conclusion of the visit, Mr. Roaf issued the following statement:

“Economic activity continues to expand, notwithstanding a temporary slowdown in the first half of the year, largely reflecting disruptions in electricity production and the negative impact of the drought on agricultural output. Domestic demand growth is robust, with continued recovery of private consumption and strong foreign direct investment. Importantly, labor market conditions have continued to strengthen, with about 120,000 new jobs created in the 12 months through June. In this context, we project growth of 2.3 percent in 2017, increasing to around 3½ percent in 2018.

“Economic policies should remain focused on improving the supply response of the economy, through the implementation of reforms aimed at fostering private sector activity. These include an improved business and investment environment; more efficient public administration and state-owned enterprises; and higher quantity and quality of public infrastructure.

“The mission started discussions with the authorities on fiscal policy for the remainder of 2017 and the key parameters of the 2018 budget, to be concluded in the October review mission. Against continued strong fiscal over-performance in the first seven months of 2017, discussions also covered potential uses of the additional fiscal space, including additional investment in priority areas, prudent increases in public wages and pensions, a reduction of labor taxes, and faster debt reduction. These discussions will continue in the coming weeks.

“The mission team is grateful for the authorities’ hospitality and close cooperation.”

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