The International Monetary Fund (IMF) team assessed that Serbia has made progress in implementing the Policy Coordination Instrument (PCI), that the economic program continues to deliver good macroeconomic results but advocated the improvement of fiscal rules and management of state-owned enterprises, as well as the privatization of Commercial Bank and HIP-Petrohemija.
“Serbia’s macroeconomic performance was also very good during 2019, with an estimated growth of 4.2 percent, supported by high FDI and intensified construction activities”, said IMF team chief Jan Kes Martine in Belgrade on February 24th to evaluate the results achieved in 2019 and progress in meeting commitments under the PCI instrument, as well as discuss priorities for this year.
He said unemployment had fallen to a record low, with steady wage growth, that inflation, which stood at two percent in January, is still moving in the lower half of the target corridor, and that the resilience of the financial system continues, while the share of non-performing loans dropped to 4.1 percent in December 2019.
“The fiscal results are still good. The general government recorded a fiscal deficit of 0.2 percent of GDP in 2019, which is in line with the PCI targets, while public debt has fallen to about 52 percent of GDP”, said Jan Kes Martine in a press release.
He added that “the macroeconomic outlook for 2020 is positive, with a projection of four percent growth”, with the IMF expecting that inflation will remain in the lower half of the target corridor.
“However, the risks are elevated, especially external ones, while a very important program of structural reforms remains. In this context, the IMF team emphasized the need to fully implement the reforms envisaged under the PCI instrument to ensure the sustainability of macroeconomic achievements and boost Serbia’s growth potential”, he said.
He emphasized that the IMF team welcomed the efforts of the Serbian authorities towards completing the privatization of Commercial Bank and stressed the importance of privatizing HIP Petrohemija.
“He also assessed the preparations that should ensure the implementation of the new public sector wage system and the transition to a new, more systematic public sector employment framework in 2021”, said the IMF team chief.
The IMF team also backed “recent efforts to adequately monitor fiscal risks and discuss options for improving fiscal rules”.
He also stressed the importance of improving the management of state-owned enterprises in order to increase the efficiency and quality of public services, the statement said.
A visit by the IMF team to Serbia for the fourth revision of the PCI instrument is planned for the second half of May, Danas reports.