IMF official questions NIP

IMF official questions NIP

The first problem, according to Hirschhofer, is that the current NIP arrangements threaten to undermine the macroeconomic stability, while bad planning that could lead to the dispersion of funds rather then the purposeful investment was the second.

“The lack of transparency was the last and certainly not the least of NIP’s shortcomings,“ Hirschhofer said.

The Resident IMF Representative urged for the redefinition of the National Investment Plan so as to secure high quality investments that could indeed contribute to Serbia’s progress.

In his opinion, Serbia needs to decrease fiscal spending so as to reduce the current account deficit, and adjust its fiscal policy in order to assure the macroeconomic stability.

Hirschofer believes that the NIP should be made more transparent, with a clear definition of the Finance Ministry’s role and responsibilities regarding the investment program, with mandatory comprehensive monitoring of NIP-funded projects.

He also suggested ways of reducing the dispersion of NIP funds to the benefit of the economic growth and prosperity.

“Should the next government undertake these measures, the NIP could have more chances to realize its original goals: good public investments, sustainable economic growth, the rise of employment rates, international competitiveness, balanced regional development and the reduction of poverty,” he argued.

He explained that the NIP, combined with the loose budgetary policy, could only be detrimental to the macroeconomic stability, adding that only half of NIP’s funds constituted investments, while another half included ongoing maintenance expenses – services, subventions, citizens’ and companies’ loans etc.

He stressed that the lack of transparency would “definitely undercut the NIP’s validity.”

He provided an example of the lack of transparency by citing the interim financing regime the Government adopted for the first quarter of the year. “The interim financing regime contains only one entry for all activities within NIP, which makes impossible for the public to differentiate between well-functioning NIP projects and the bad ones.”