"IMF to discuss conditions in August"

IMF Deputy Managing Director Murilo Portugal said today in Belgrade it was still early to say whether Serbia has violated its agreement with this organization. He explained that the conditions for the second withdrawal of the IMF stand-by loan, approved earlier this year, will be discussed in August, when an IMF mission is set to visit Serbia. "IMF to discuss conditions in August" Portugal's current visit to Belgrade, however, is not of a working nature, since he came to attend the celebrations marking the 125 anniversary of the founding of the National Bank of Serbia (NBS). “We will see in August whether there was any kind of deviation from the agreement with your government – how great that was, and what the reasons for it were. We will discuss whether the reasons for the deviation are of an external nature, something that the government could not have had any influence on,” Portugal said. “We will also analyze whether the government had implemented the agreed measures and see whether they are not inflationary, in other words, if the financing is sustainable and does not affect inflation. Only then will we be able to talk about an eventual increase of the deficit,” he explained. "We will have to check whether the burden of the fiscal harmonization is distributed in the right way, between the private and public sector. But we will discuss all this in August. I am convinced, however, that we will reach an agreement. Perhaps the talks will be complicated and will last longer, but I think that we will reach an agreement,” the IMF official said. On Wednesday, Portugal met with PM Mirko Cvetkovic, when they discussed possibilities of increasing the fiscal deficit. They also spoke about ways of its financing, concluding that the current program with the IMF is being carried out successfully, a statement from the government after their meeting said. Cvetkovic and Portugal discussed the overall economic situation in Serbia, ahead of the regular visit by an IMF mission, planned for late August, evaluating that the current arrangement with Fund, together with the government measures, had produced good results, the statement added. According to this, good results were achieved primarily in the areas of financial sector stabilization and exchange rate stabilization, while the industrial production decline was halted. The government's readiness to carry out reforms – which should lead to the state administration reduction in the long run – was reconfirmed, the statement said. Under the signed stand-by arrangement for 2009, a fiscal deficit of three percent of Serbia's GDP was agreed.

"IMF to discuss conditions in August"

Portugal's current visit to Belgrade, however, is not of a working nature, since he came to attend the celebrations marking the 125 anniversary of the founding of the National Bank of Serbia (NBS).

“We will see in August whether there was any kind of deviation from the agreement with your government – how great that was, and what the reasons for it were. We will discuss whether the reasons for the deviation are of an external nature, something that the government could not have had any influence on,” Portugal said.

“We will also analyze whether the government had implemented the agreed measures and see whether they are not inflationary, in other words, if the financing is sustainable and does not affect inflation. Only then will we be able to talk about an eventual increase of the deficit,” he explained.

"We will have to check whether the burden of the fiscal harmonization is distributed in the right way, between the private and public sector. But we will discuss all this in August. I am convinced, however, that we will reach an agreement. Perhaps the talks will be complicated and will last longer, but I think that we will reach an agreement,” the IMF official said.

On Wednesday, Portugal met with PM Mirko Cvetković, when they discussed possibilities of increasing the fiscal deficit.

They also spoke about ways of its financing, concluding that the current program with the IMF is being carried out successfully, a statement from the government after their meeting said.

Cvetković and Portugal discussed the overall economic situation in Serbia, ahead of the regular visit by an IMF mission, planned for late August, evaluating that the current arrangement with Fund, together with the government measures, had produced good results, the statement added.

According to this, good results were achieved primarily in the areas of financial sector stabilization and exchange rate stabilization, while the industrial production decline was halted.

The government's readiness to carry out reforms – which should lead to the state administration reduction in the long run – was reconfirmed, the statement said.

Under the signed stand-by arrangement for 2009, a fiscal deficit of three percent of Serbia's GDP was agreed.