IMF and Serbia in a new deal to boost economic growth

The new deal would not involve fresh money but would provide support for a programme of reforms.

Serbia has confirmed its interest in a new deal with the International Monetary Fund that will focus on reforms to boost economic growth, the lender said on Friday after its mission met top Serbian officials in Belgrade.

The Balkan country successfully completed a USD 1.48 billion three-year loan programme with the IMF last month, without drawing on the funds. The new deal would not involve fresh money but would provide support for a programme of reforms.

"The program is expected to be supported by a Policy Coordination Instrument, a non-financing arrangement recently introduced in the IMF to provide a framework for policy advice and monitoring in countries which do not need IMF financial support," the lender said in a statement.

Serbia should now tackle the grey economy, increase public and private investments, strengthen fiscal institutions and ensure financial sector support for growth, it said.

The IMF said its mission, led by James Roaf, had met key Serbian officials, including President Aleksandar Vucic and Prime Minister Ana Brnabic, to discuss macroeconomic objectives and policy priorities.

Brnabic told Reuters in an interview last month that the government expected to start negotiations with the IMF on the new agreement in March and April and to sign it by mid-year.

Vucic said after meeting Roaf that Belgrade wanted to maintain stability in its public finances.

"More importantly, (we want) to achieve bigger economic growth," Vucic said in a statement.

Serbia's economic output grew by only a moderate two per cent in 2017, affected by a drop in electricity output and a poor harvest. The economy is forecast to grow 3.5 per cent this year.

Serbia and the IMF will continue talks in May over specific policy measures to be included in the program.

The previous deal with the IMF, signed in February 2015, committed Serbia to a series of measures to reduce public debt and the budget deficit, including cuts in public sector wages and pensions.