IMF: Serbia needs to meet conditions to complete first PCI review

REUTERS/Yuri Gripas/File Photo

The International Monetary Fund (IMF) said on Friday that its mission expects to finalize discussions on the 2022 budget with the Serbian authorities soon, adding that some conditions still need to be met to complete the first PCI review.

The press release quoted IMF Mission chief Jan Kees Martijn as saying that the mission held productive discussions with the authorities on progress and policies to complete the first review under the PCI. “We expect to finalize discussions on the 2022 budget in the near term,” he said, adding that successful completion of the review is subject to meeting the remaining program conditions, and approval by the IMF Management and Executive Board.

“The mission agreed with the authorities on key parameters of the 2022 budget that is currently under preparation. Considering the ongoing economic recovery, it would be appropriate to narrow the 2022 fiscal deficit to 3 percent of GDP, putting public debt on a clear downward path, thus rebuilding room for maneuver to deal with future shocks. Public sector wage increases should be limited, and structural pension increases be guided by the existing indexation formula. It is important that the budget continues to ensure adequate room for healthcare and maintains capital expenditures above historical levels to address Serbia’s sizeable infrastructure needs and support a green recovery. Approval of a budget with a deficit and primary spending level along these lines will be a prior action for the first review under the PCI,” the press release said.

It warned that important reforms remain to be implemented.