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The International Monetary Fund (IMF) officially confirmed today that it has again improved Serbia’s gross domestic product forecast for 2020, and now estimates a decrease of minus 1.5 percent, not less 2.5 percent, as predicted in a fall report. published. earlier this week.
These projections, as stated in the IMF statement, are based on the latest data, which indicates a faster than expected recovery in the Serbian economy.
Therefore, Serbia’s GDP for this “crown year” is now expected to fall by just 1.5 percent, and then see growth of 5.0 percent next year.
IMF mission chief Jan Kes Martejn says the Fund team held productive conversations with Serbian authorities through virtual meetings from October 5-16, in which the fifth and final revision of the Instrument of Justice was discussed. Policy Coordination (PCI). and that you have agreed on the policies necessary to complete the audit.
“The implementation of the program generally went according to plan, and economic activity is recovering after a sharp decline in the second quarter of 2020 caused by the Kovid-19 pandemic,” Martein said on the occasion of the end of the IMF talks. with the Serbian authorities.
It notes that monetary and financial measures and a comprehensive fiscal package, which were introduced in response to the crisis, have played a key and positive role in supporting the economy.
“GDP is now expected to register a real decline of 1.5 percent in 2020, followed by a five percent increase in 2021. These projections are also based on the most recent data indicating a recovery that is faster than what was previously expected and update the projections published in the IMF’s World Economic Forecast report of October 13, “Martein added.
However, he notes that the prognosis remains highly uncertain, due to the unpredictable impact of the epidemic and the consequent adverse effects on the economy of Serbia and its trading partners.
Inflation, he says, remains low and is expected to remain in the lower half of the National Bank of Serbia’s target corridor in 2021, while the banking system has remained stable, liquid and well capitalized.
“Tax revenues exceeded expectations during the fourth review of the PCI instrument, but expenses will be higher given that fiscal measures have been extended and that the realization of public investments will accelerate in the last quarter of this year,” said the head of the mission of the IMF.
In this context, he adds, the total fiscal deficit is expected to be below nine percent of GDP in 2020 and that public debt will remain below 60 percent of GDP.
“The IMF team has reached an agreement with the Serbian authorities on key budget parameters for 2021. The budget must strike a balance between supporting economic recovery and maintaining fiscal responsibility,” Martein said.
In the context of the current recovery in economic activity, for the budget currently under preparation, he believes that it would be appropriate to reduce the fiscal deficit to 3.0 percent of GDP, which would ensure a further decrease in the share of public debt in GDP.
Within this budget space, increased public investment, including green investment, will not only support recovery, but will also foster potential growth, he said.
To make room for this and given the higher fiscal risks, among other things due to state-owned companies facing credit difficulties and guarantees, it is important that the share of total public sector wage costs in GDP decreases to more sustainable levels, after growth in the past three years, the IMF said in a statement.
Therefore, it recommends that in 2021 wage increases in the public sector be limited.
Pension increases, according to the IMF, should follow the agreed Swiss formula and additional increases or ad-hoc payments should be avoided.
Fiscal risks arising from state-owned companies must be closely monitored and possible support to these companies must be implemented transparently through the budget.
“After some delays due to the pandemic, the implementation of structural reforms must be accelerated to ensure strong and stable growth in the medium term. Continuous efforts are needed to strengthen tax administration, public investment management, as well as monitoring and managing fiscal risks, “he said. Background.
Martein also emphasizes that reforms to the public sector wage and employment framework, which he says are significantly overdue, need to be completed, and that improvements in corporate governance in public companies, including EPSs, as well as the development of markets capital in Serbia beyond the crucial.
“We welcome the progress made to complete the privatization of Komercijalna Banka and support further efforts to privatize Petrohemija. Medium-term priorities aimed at creating conditions for faster growth of the private sector and EU income levels also include strengthening of the rule of law and the improvement of the judicial system, “said Martein. statements on the occasion of the conclusion of the talks on the fifth revision of the PCI instrument.
(Kurir.rs/Tanjug)
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