IMF official sees Serbia's debt as "very worrying"

Serbia's public debt, whose level is currently well above 45 percent of the GDP, is very worrying, said IMF resident representative in Serbia Bogdan Lissovolik. Economic research shows that with a public debt between 40 and 45 percent, developing countries such as Serbia come close to dangerous indebtedness levels, Lissovolik said for the Tuesday edition of Politika, noting that most countries in the region have considerably lower debts. IMF official sees Serbia's debt as "very worrying" Lissovolik believes that in order to reduce the risk of a public debt crisis, Serbia needs to immediately pass measures which would bring the debt back under the legal limit in the medium term, and convincingly stick to this plan. Asked what the new government should do first, Lissovolik said it was important to adopt a realistic and cost-effective budget balancing bill, a medium-term plan for reducing the public debt, and a package of steps which would lay down the foundations for healthy economic growth. Talking about the measures proposed by the Fiscal Council, Lissovik said they should be carefully considered, but that other options were available. He said that future economic policy should take into account the latest trends, possibilities for financing the deficit and the government's priorities. He believes that using National Bank of Serbia (NBS) reserves to foster economic growth is a threat to financial stability and distracts politicians from measures that could truly stimulate growth. The NBS can play a supporting role in the process from time to time, as long as it does not jeopardize its primary goal - inflation, or its secondary goal - financial stability, said Lissovolik. Asked whether prime minister-elect Ivica Dacic, who has said in the past that the IMF is not welcome in Serbia, was welcome at the IMF, Lissovolik said they were willing to talk to the government which was willing to talk to them. Bogdan Lissovolik (Tanjug, file) Politika Tanjug

IMF official sees Serbia's debt as "very worrying"

Lissovolik believes that in order to reduce the risk of a public debt crisis, Serbia needs to immediately pass measures which would bring the debt back under the legal limit in the medium term, and convincingly stick to this plan.

Asked what the new government should do first, Lissovolik said it was important to adopt a realistic and cost-effective budget balancing bill, a medium-term plan for reducing the public debt, and a package of steps which would lay down the foundations for healthy economic growth.

Talking about the measures proposed by the Fiscal Council, Lissovik said they should be carefully considered, but that other options were available.

He said that future economic policy should take into account the latest trends, possibilities for financing the deficit and the government's priorities.

He believes that using National Bank of Serbia (NBS) reserves to foster economic growth is a threat to financial stability and distracts politicians from measures that could truly stimulate growth.

The NBS can play a supporting role in the process from time to time, as long as it does not jeopardize its primary goal - inflation, or its secondary goal - financial stability, said Lissovolik.

Asked whether prime minister-elect Ivica Dacic, who has said in the past that the IMF is not welcome in Serbia, was welcome at the IMF, Lissovolik said they were willing to talk to the government which was willing to talk to them.