SERBIAN ECONOMY – REVIEW AND RECOMMENDATIONS BY IMF

 

At the round table with companies and bankers held on June 22nd in the Belgrade Chamber of Commerce organised by its Association of Financial Organisations, Mr. Bogdan Lissovolik, IMF Resident Representative for Serbia, remarked that Serbia, in IMF's opinion, could be closer to the realisation of the worse-case scenario, that is, decline of economy by 6% in 2009, instead of optimistic 2%. However, due to its stable banking sector, Serbia is in better position than its neighbouring countries.

Milan Janković, President of the Belgrade Chamber of Commerce, opened the meeting by expressing his hopes that in the conditions of negative impact of world economic crisis, the dialogue will help to find out the adequate solutions to slow down the further decline of Serbian economy. Petar Stefanović, President of the Board of Association of Financial Organizations, event moderator, confirmed that cooperation between economic operators and bankers is essential in order to have sustainable real sector. He also emphasized the importance of the IMF's support for improvement of Serbia's credit rating.

Mr. Bogdan Lissovolik presented the role of the IMF and measures it is undertaking for alleviation of economic crisis in many countries. The crisis has struck all countries, without exception, but some have fallen into serious recession that requires urgent measures and intervention of that country's government. As for the IMF's stand-by arrangement with Serbia, he pointed out its importance for re-establishment of market trust. Decrease of GDP in the first quarter of 2009 was 2%, but by the end of the year it is expected to drop by 6%. Also, the budget deficit is exceeding the planned 3%, so the Serbian Government will have to work on its decrease which will be the subject of the talks with the IMF in August 2009. The representatives of the companies pointed out the problems of solvency and huge Government's debt towards real sector, as well as that the increase of VAT rate, which has been mentioned as one of the possible measures, would have a disastrous effect on the economy. In answering the questions related to financial sector, Bogdan Lissovolik said that, due to solvent and strong banking sector, Serbia is in better position than many other countries in the region.
Stress tests, recommended by the IMF, that are taken in the banking sectors in many countries are intended to identify conditions and capacity of a banking sector to sustain the impact of economic crisis.
Further development of the financial sector, especially of insurance and capital markets, requires improved quality of information and accounting data, with implementation of the international standards.