Serbia, IMF agree stand-by arrangement

REUTERS/Yuri Gripas/File Photo

The International Monetary Fund said on Wednesday that it reached a staff-level agreement with the Serbian authorities on the third review under the Policy Coordination Instrument (PCI) and a 24-month Stand-By Arrangement (SBA) subject to approval by the IMF Executive Board in December 2022.

A press release said that the SBA will help address Serbia’s emerging external and fiscal financing needs given the challenging global economic environment and will support the authorities’ macroeconomic policies and structural reform efforts, with focus on the energy sector. “The SBA will replace the existing PCI and build on the PCI reform agenda with appropriate modifications for recent policy challenges,” it said.

IMF mission leader Jan Kees Martijn said that the 24 month SBA will allow Serbia access to some 2.4 billion Euro. “The authorities intend to use the financing that will become available during the first part of the arrangement and to treat the remaining access as precautionary,” he said.

“The mission agreed with the authorities on a decline in the total fiscal deficit in 2023. Public sector wage increases should be limited, and structural pension increases guided by the indexation formula consistent with the new fiscal rule. The budget will maintain high capital expenditure to address Serbia’s sizeable infrastructure needs. Approval of a budget with a deficit and primary spending level along these lines would be a prior action for the approval of the SBA request,” he said.