The International Monetary Fund (IMF) has commended Serbia for its progress and is ready to close the current “stand-by” arrangement. Serbia, however, intends to enter a new, non-financial agreement focused on monitoring rather than financial support. Economists are divided on the necessity and implications of this new arrangement.
Serbia is on the verge of concluding its existing “stand-by” arrangement with the IMF and will replace it with a new three-year agreement. This new arrangement aims to implement various economic reforms and fiscal measures while confirming a budget deficit limit of three percent.
Prime Minister Miloš Vučević emphasized that this agreement will enhance Serbia’s cooperation with the European Union and improve the country’s economic and political stability. Jorgovanka Tabaković, the governor of the National Bank of Serbia, supports the arrangement, viewing it as essential for preserving recent economic gains and continuing reforms.
The new Policy Coordination Instrument (PCI) will not provide financial support but will offer advisory assistance, aiming to bolster macroeconomic stability and prevent crises. While some experts argue this is a prudent step, others express skepticism about its necessity and effectiveness.
Dejan Jovović, an international finance expert, raises concerns that the IMF’s involvement might lead to excessive oversight, extending beyond its traditional focus on monetary and fiscal matters. He questions the realism of Serbia’s current economic assessments, particularly regarding exchange rates, and argues that the focus should also shift to fostering domestic investment rather than relying heavily on foreign capital.
Conversely, Goran Radosavljević, a professor at the Faculty of Economics, sees value in maintaining an arrangement with the IMF, asserting it can provide essential oversight and help avoid fiscal mismanagement. He views the new agreement as a “light” version that allows Serbia to set targets while benefiting from regular evaluations of its economic health.
Overall, while there is a general consensus on the importance of monitoring and reform, opinions diverge on the necessity and implications of Serbia’s new agreement with the IMF.
