Stabilising public debt should be Serbia’s top priority in 2014 – IMF official

Published on December 6, 2013 11:06 am

One of the Serbian government’s top priorities next year should be efforts aimed at stabilising the public debt which more than doubled since 2008 when it stood at 29% of GDP, the IMF resident representative in Serbia , Daehaeng Kim, was quoted as saying by news agency Tanjug. Kim added that in the short run the country must cope with relatively weak economic growth coupled with high unemployment at over 24% and large budget gap. He noted that the Serb authorities need to work on creating macroeconomic stability and implementing structural reforms in order to build solid foundations for sustainable economic growth. Kim welcomed the government’s new basket of austerity measures which includes amending the labour and privatisation laws and ensuring the sustainability of the pension system and public administration. The latter is expected to help stabilise the country’s public debt at around 70% of GDP in the near-term, according to the government’s 2014 fiscal strategy. A technical mission of the IMF began a two-week visit to Serbia on December 3 to examine the state of the public finances as the country hopes to qualify next year for a precautionary agreement with the global lender. Serbia’s public debt is projected to increase to 64% of GDP this year from 61% of GDP at end-2012, well above the legal limit of 45%, according to the government. It is forecast to start declining in 2016 thanks to falling budget deficits. The public debt rose significantly since 2008 due to lower budget revenue and the lack of structural reforms which led to an increase of the country’s consolidated budget gap from 2.6% of GDP in 2008 to 6.4% in 2012.

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