IMF official: Eurozone to experience tough 2012

IMF's Mark Allen said on Wednesday that the eurozone will experience a tough 2012, and that the Fund has already downgraded its growth projections. The IMF regional representative for Central and Eastern Europe warned that even these revised projections might prove too optimistic, so Serbia must find a way to adapt to even worse circumstances. IMF official: Eurozone to experience tough 2012 In a live broadcast on Serbia's state television RTS, Allen said that the mission recommended certain anti-crisis measures to the Serbian government, and that program is based on the implementation of the Law on Fiscal Responsibility, which is a major factor that should help Serbia maintain credibility in the financial market. Banks in Serbia have a lot of capital, which is a good position for responding to possible shocks from the eurozone. We agreed on the deficit, and set it at 4.5 percent in 2011, and 4.25 percent in 2012. That requires measures aimed at tackling additional spending that would help balance the budget more efficiently, Allen explained. When asked whether in 2012 certain taxes will be increased, Allen said that will not happen, but voiced expectation that taxes will be collected more effectively, that the country will benefit from dividend incomes, and that the government will be more careful with regard to public procurements. In 2012, pays and salaries will be indexed to the inflation rate and GDP growth according to the agreed formula, Allen added. Allen expressed hope that Serbia will not have to withdraw EUR 1 billion credit line approved by the IMF as part of the precautionary arrangement and explained that these are reserves in case of additional shocks from the eurozone. Mark Allen (Tanjug)

IMF official: Eurozone to experience tough 2012

In a live broadcast on Serbia's state television RTS, Allen said that the mission recommended certain anti-crisis measures to the Serbian government, and that program is based on the implementation of the Law on Fiscal Responsibility, which is a major factor that should help Serbia maintain credibility in the financial market.

Banks in Serbia have a lot of capital, which is a good position for responding to possible shocks from the eurozone. We agreed on the deficit, and set it at 4.5 percent in 2011, and 4.25 percent in 2012. That requires measures aimed at tackling additional spending that would help balance the budget more efficiently, Allen explained.

When asked whether in 2012 certain taxes will be increased, Allen said that will not happen, but voiced expectation that taxes will be collected more effectively, that the country will benefit from dividend incomes, and that the government will be more careful with regard to public procurements.

In 2012, pays and salaries will be indexed to the inflation rate and GDP growth according to the agreed formula, Allen added.

Allen expressed hope that Serbia will not have to withdraw EUR 1 billion credit line approved by the IMF as part of the precautionary arrangement and explained that these are reserves in case of additional shocks from the eurozone.