"Serbia wants agreement with IMF on 3-year loan"

"Serbia wants agreement with IMF on 3-year loan"

Vujović, who is also the acting finance minister after Lazar Krstić stepped down on July 12, pledged to keep the country from going bankrupt and vowed the effect of reductions will be more evenly distributed in the economy by 2017.

Serbia hopes to finalize the talks with the IMF by the end of September of early October, he noted.

Talks with the IMF will offer Serbian leaders the chance to discuss monetary policy easing and ask the IMF to “relax a little bit some of the monetary instruments” as “a more-relaxed monetary policy may be in order, given the exceptionally low level of inflation at 1.3 percent,” Vujović stated.

Vujović believes the government should come up with an equally credible, but socially more doable program to narrow the deficit by EUR 500 million a year through 2017.

The government has yet to draft its 2014 supplementary budget. It is still too early to assess the depth of necessary cuts that come hand-in-hand with a resolution to preserve dozens of state-owned enterprises that employ around 60,000 people and drain an estimated $800 million a year from the budget, he said.

New laws on bankruptcy and state asset sale will be adopted by the end of July, allowing the government to move fast to resolve those companies and qualify for a USD250 million loan from the World Bank for the budget, Vujović pointed out.

The money should be available by the end of the year, right after the signing of the arrangement with the IMF, he remarked.

Even with its high deficit, Serbia will not go bankrupt because it has sufficient liquidity and capital inflow, which will be more than enough to finance the existing deficit, he thinks.