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| Serbia not to seek IMF loan, only advice: PM |
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Time is GMT + 8 hours
Posted: 1-Nov-2008 02:13 hrs |
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| Serbia is negotiating a new two-year arrangement with the International Monetary Fund (IMF) to monitor its economy but will not ask for a loan, Prime Minister Mirko Cvetkovic, seen here in July 2008, said Friday. |
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Serbia is negotiating a new two-year arrangement with the International Monetary Fund (IMF) to monitor its economy but will not ask for a loan, Prime Minister Mirko Cvetkovic said Friday.. "Our idea is not to ask (the IMF) for additional money because at this very moment we are not considering that our (foreign) reserves are tiny like (in) other countries," Cvetkovic told AFP.. However, "the aim of this arrangement is a precaution, so if we realise that there will be some need of money it will allow us to do so," he said.. An IMF team headed by Alber Jaeger arrived to Serbia earlier this week as many east European countries came under pressure from the global financial crisis which has seen Hungary and Ukraine arrange special IMF loan packages.. The team was to hold talks with the government, central bank and other institutions during a 10-day mission.. "We have discussed with the IMF an agreement so that they can monitor our situation and help us in achieving the goals" of the 2009 budget, Cvetkovic said.. Reducing the budget deficit to below two percent of gross domestic product (GDP) was a crucial task, he noted.. In addition, the "IMF will help us to convince different interest groups like pensioners and unions not to ask" for payments to be increased, he said.. The prime minister, heading a pro-European government dominated by pro-western President Boris Tadic's Democrats, said his cabinet intended to "strengthen our fiscal policy and basically reduce spending generally, including government spending as well as private sector spending.". During a September visit to Belgrade, the IMF had urged Serbia to adopt ambitious economic reforms and a strict fiscal policy in order to cope with the crisis.. Cvetkovic said the crisis would not hit Serbia severely in the short-term but he expected some negative consequences in the longer-term, especially in terms of foreign investment.. Earlier this week, the Belgrade Stock Exchange hit an all-time low, having lost some 70 percent as the financial crisis compounded political and economic uncertainty in the former Yugoslav republic.. At the same time, the dinar has faltered, hitting Friday its lowest point this year of 84.99 against the euro despite central bank intervention.. Earlier on Friday the central bank hiked interest rates sharply to 17.75 percent from 15.75 percent, the Beta news agency reported.. Serbian interest rates were last raised in May by half a point to 15.75 percent as authorities targeted a 2008 inflation rate of 10 percent.. The Serbian statistics institute said Friday that inflation in the first six months of this year came in at 8.0 percent.. The prime minister said the economy would be under pressure next year "but I hope it will not be so damaging ... and that we might be able to get through the crisis with less development but ... (continuing) competitiveness.". Cvetkovic said that while there had been some withdrawals of savings from Serbia's banks, "we are not in so bad shape.". Last week the government increased the deposit guarantee from 3,000 to 50,000 euros among other measures to boost confidence in the banking system.. The measures brought results quickly, Cvetkovic said. "At this very moment there are no more withdrawals. I'm not so much worried about that." — AFP
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