Tabakovic: IMF has confirmed adequacy of Serbia's economic policy

BELGRADE - The IMF Executive Board has made a decision on successful completion of the first review of the results of the economic programme of the Republic of Serbia, supported by a stand-by arrangement (SBA), and concluded regular consultations under Article IV of the IMF’s Articles of Agreement that were held with Serbia, the National Bank of Serbia (NBS) said in a statement on Thursday.

"In making the decision, it was noted that the Republic of Serbia is successfully implementing the agreed economic programme. All the criteria based on which the programme results are monitored have been met. The achieved balance of payments and fiscal results outperformed the expectations, and the implementation of the structural reform agenda is advancing well," the central bank said in a statement.

"The IMF Executive Board’s decision confirms that an adequate economic policy is being implemented in Serbia, which they expect going forward as well. Even in times of global uncertainty, Serbia has proven itself as a country that has provided its citizens and corporates with what they needed the most in such circumstances - stability,” said NBS Governor Jorgovanka Tabakovic.

"Y-o-y inflation has been on a decline since April, and is expected to fall more sharply by year end and return within the bounds of the 3±1.5 pct target in mid-2024. In the coming period, in an environment of the still pronounced challenges from abroad, we will continue to carefully calibrate monetary policy decisions, relying on the flexibility of the monetary framework we have created, which enables prompt response," Tabakovic pointed out.

"We have maintained the relative stability of the dinar exchange rate against the euro even in globally challenging and aggravated circumstances, this being an important pillar of the country’s overall stability and certainty of doing business. We raised FX reserves to an all-time high of 22.1 bln euros at end-May. We also preserved full financial stability, with high capitalisation and liquidity of our banking sector and a record low level of NPLs. Policy coordination and timely and adequate measures have enabled Serbia, in the face of a multidimensional and years-long crisis, to preserve the stability of its economy and consumer and investor confidence, as evidenced by the around 9 pct cumulative real GDP growth in the period 2020-2022, record high FDI inflow and continued increase in private sector employment and wages," she concluded.

"The IMF Executive Board’s positive assessment of Serbia’s performance enables the withdrawal of funds in the amount of 164 mln SDR (over 200 mln euros), which will bring the total funds drawn under the arrangement to 949 mln SDR (about 1.2 bln euros). Going forward, if the external environment is supportive, SBA may be treated as precautionary at the time of the second review, which is earlier than expected at its approval," the NBS also said.