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Serbia nears IMF agreement: Evaluating economic stability and investment prospects

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The Serbian government recently concluded discussions with the International Monetary Fund (IMF) as part of the third review of the ongoing Stand-By Arrangement. According to the report by the IMF’s mission chief, Donald Meitiga, an agreement was reached at a technical level, pending approval from the IMF’s executive board in June.

Should the arrangement review receive approval, Serbia stands to gain access to an additional 400 million euros. While Serbian authorities intend to treat the Stand-By Arrangement as a precautionary measure, experts interviewed by Euronews Serbia suggest that Serbia may not necessarily utilize these funds, viewing them instead as a valuable reserve.

Aleksandar Milosevic, Deputy Director of New Economy, indicates that Serbia may not require this additional funding presently but remains committed to meeting all obligations under the IMF arrangement. Dusan Stojakovic, Editor of the economic section in “Vecernje Novosti,” questions the necessity of the funds, highlighting Serbia’s stable public finances.

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In addition to acknowledging Serbia’s sound economic policy management, the IMF recommended cautiousness in future investments and transparency in spending. They cautioned against potential strains on Serbia’s finances due to significant planned investments in public infrastructure, urging careful prioritization.

Regarding the projected budget deficit aligning with commitments under the Stand-By Arrangement, the IMF suggests Serbia could increase investments, particularly in projects like EXPO 2027. However, they advise against destabilizing Serbia’s finances.

The IMF also welcomed progress in reforms within Serbia’s energy sector and encouraged the government’s commitment to deregulating energy prices for businesses, which could lower costs and promote economic growth.

Regarding investment rating implications, Milosevic and Stojakovic both believe that Serbia is on the brink of achieving an investment rating, which would attract more investors and lower borrowing costs. They stress the importance of domestic energy production and urge Serbia to pursue an independent economic path while fostering cooperation.

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Overall, while the IMF’s recommendations emphasize careful financial management and transparency, Serbia’s potential economic stability and progress towards an investment rating indicate a promising outlook for its future economic development.

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