Serbia will take several more weeks to draft measures to rein in spending and narrow the gap to it can persuade the International Monetary Fund to discuss a new program with the biggest former Yugoslav republic.
Premier Aleksandar Vucic and his team will “consider policy measures in the coming weeks” rather than today, as promised by Finance Minister Dusan Vujovic said on Sept. 4. Vucic will aim for protecting the most vulnerable citizens and helping Serbia reduce shortfalls, according a statement e-mailed by the government’s press office.
Vucic is trying to restart growth and add jobs in an economy facing its third recession in five years. Serbia informed the IMF about measures to ensure savings in the budget, stabilize public debt and “jumpstart” the economy, the government said after Vucic and cabinet members and the central bank governor met with the IMF’s Daehaeng Kim.
“It’s not a matter of delay,” Labor Minister Aleksandar Vulin said, according to a video statement posted on his ministry’s website. “We need a deal with the IMF, we want to reach a deal with the IMF but we also want the economy to perform and the citizens to be happy.”
Vucic needs to rein in public spending and cut the gap from 8 percent of gross domestic product, and end years of budget support of as much as $1 billion a year to around 600 unprofitable companies and 90,000 workers.
The yield on Serbia’s dollar bonds maturing in 2021 fell 3 basis points, or 0.03 percentage point, to 4.736 percent at 4:14 p.m. in Belgrade, according to data compiled by Bloomberg. The dinar traded 0.1 percent firmer at 118.9730 per euro.
Draft Supplement
Vujovic, the second finance minister since Vucic took office on April 27, said last week the government will submit the draft supplementary 2014 budget to lawmakers by Sept. 15 after outlining the measures today.
Talks with the IMF on a looser precautionary deal, rather than a binding three-year stand-by loan, are expected in the second half of October.
The government met with the IMF’s resident representative amid reports that Fiat SpA (F)’s unit, the nation’s biggest exporter, temporarily halted production, citing a crisis in European and global car markets.
Fiat exported 921.6 million euros ($1.2 billion) from its plant in Serbia between January and July, 9.8 percent more than last year and four times more than second-ranking NIS, crude oil refiner, controlled by Gazprom Neft OAO (GAZ), according to Finance Ministry data.
The IMF suspended a precautionary loan program with Serbia in February 2012, when the government slipped on agreed targets before general elections that year.
Vucic’s Progressive Party, with is dominating the government for a third year, has been promising to restart loan talks with the IMF since August 2012.
Source Bloomberg
