IMF And Serbia Reach Agreement On Loan Deal

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The International Monetary Fund and Serbia reached a deal on Wednesday, which would allow the country to access the next installment of the EUR 2.9 billion emergency loan.

At the conclusion of the second review of the Stand-By Agreement, Albert Jaeger, who led the IMF mission said, " An IMF staff mission and the Serbian authorities have reached agreement, subject to approval by the IMF Management and Executive Board".

"In the next few weeks the authorities intend to implement several agreed measures, including the submission of the 2010 budget to Parliament", he said."Assuming adoption of these measures and approval by IMF Management, the second review could be considered by the Executive Board in late December. Completion will allow Serbia to draw an amount compatible with its external financing need", Jaeger added.

The IMF noted that the stand-by agreement helped Serbia achieve a number of goals, including helping it to contain a decline in output as also easing financial tension and helping to decrease inflation rates. However, weak domestic demand strained the fiscal position, which was the one of the targets not met under the program. The fiscal deficit target was raised to 4.5% of GDP for 2009, but is to be brought down to 4% in 2010, and would still require the maintainence of fiscal measures put in place in 2009. Moreover, the lender said the monetary policy would remain focused on inflation.

Meanwhile, the IMF expects Serbia's GDP to fall 3% this year, but post a modest growth of 1.5% in 2010.

(Market News Provided by RTTNews)