"Serbia wants precautionary arrangement with IMF"

"Serbia wants precautionary arrangement with IMF"

"That implies that there will be no funds granted and that there will just be a monitoring of measures agreed with the International Monetary Fund (IMF)," the governor said.

The foreign exchange reserves total over EUR 10 billion, with state foreign exchange reserves accounting for more than 70 percent, or over EUR 7 billion, Tabaković said in a lecture on the impact of international financial institutions on Serbia's monetary policy, delivered at the Military Academy in Belgrade.

The structure of the foreign exchange reserves is much more favorable than in the past, when funds owned by commercial banks accounted for most of them, she said.

Tabaković said that she hopes that inflation will remain within the target of four percent plus minus one percent if this season's agricultural output turns out to be good, specifically, in case there is no drought during the summer, and if the political situation in the wider region does not deteriorate.

Low inflation is a prerequisite for more offers of bank loans denominated in the national currency, she said.

There are plans to amend the law on protecting users of financial services, with new bills on payment services, insurance, as well as amendments to the law on the NBS - which will expand the central bank's authority to act regarding problematic banks - to enter parliamentary procedure.

Asked about lower interest rates on loans, Tabaković said that, in a market economy, the NBS does not have the right to curb interest rates and that it "does not dare to make such a move when 75 percent of the banks are foreign-owned."

"For this reason, by publishing an overview of total interest-related costs per loan, we wanted to make it possible for citizens to compare the banks," she said.

Unfortunately, banks introduced one-off loan processing fees as soon as interest rates on overdrafts were cut, making the loans more expansive for no justifiable reason, she said.

"We are looking for ways of getting around this without causing the opposite effect," Tabaković said.