IMF: Unemployment, public debt, budget deficit problems

IMF: Unemployment, public debt, budget deficit problems

At the closing press conference following the official talks that ran from November 4 to 20, the officials said that the new arrangement should be approved by the IMF board of executive directors, and is due to come into effect on January 1, 2015.

Murgasova said that a high unemployment rate, public debt and budget deficit remain the challenges facing the Serbian government.

Serbia needs to implement certain economic recovery measures that will secure macroeconomic stability, job creation, fiscal consolidation, which should halt a rise in the country's public debt, Murgasova said.

The fiscal consolidation measures are aimed at reducing the public spending, total expenditures for public sector salaries and pensions, and budget expenditures for public companies.

The accompanying structural reforms should facilitate job creation, public debt reduction, and the fiscal consolidation measures should curb the high public spending, primarily in the public sector which is a budget beneficiary, while at the same time looking after the most vulnerable population, she noted.

The fiscal adjustment should enable a relaxation of the monetary policy, if external conditions allow for that. That would enable a drop in interest rates, Murgasova said.

Governor of the National Bank of Serbia (NBS) Jorgovanka Tabaković said that on its part, the NBS will contribute to boosting the credit activity, adding that the NBS Executive Board decided recently to reduce the key policy rate from 8.5 to 8 percent, and changed the decision concerning mandatory bank reserves.

IMF Resident Representative in Belgrade Daeheng Kim took part in the conference at the Serbian government building.

In the last 15 years, Serbia has had three arrangements with the IMF, stand-by agreements in 2001 and 2004 and a precautionary arrangement in 2009.

The previous arrangement between Serbia and the IMF was concluded in late September 2011, and frozen in February next year, as the 2012 budget departed from the agreed fiscal program.