IMF projects GDP growth of 2.5 pct for Serbia in 2016

The International Monetary Fund (IMF) increased its projection of GDP growth for Serbia from 1.8 to 2.5 percent on Tuesday.

The projection was made after two weeks of negotiations over an IMF assessment between the IMF, Serbian government and the National Bank of Serbia

"We expect now that in 2016 the real growth of GDP will be 2.5 percent, while the inflation will be 1.3 percent," IMF mission chief James Roaf said at a press conference.

He added the results were due to the good economic program Serbia is continuing, and that economic growth was supported by significant investments and increase in exports.

Roaf estimated that the IMF assessment would be completed by the end of August, after which Serbia will have additional 147 million euros (165 million U.S. dollars) available under the stand-by arrangement, bringing the total available funds to 762 million euros, which Serbia announced it has no intention to withdraw.

Serbia signed a precautionary stand-by arrangement with IMF worth 1.2 billion euros in February 2015. This is the second time IMF has changed its projection of Serbia's GDP growth this year, having changed it from 0.5 to 1.8 percent of GDP earlier this year.

Roaf pointed out that inefficient and unviable state-owned companies presented for a long time an obstacle to the private sector-led growth, and that a lot of tough tasks are left to be completed in this area, especially in energy and mining.

He said there will be no increase of salaries in the public sector and pensions that were decreased at the beginning of last year, and that this topic will not be on the negotiating table before the end of 2016.

"The financial sector agenda in 2016 focuses on two areas: first the reform of state-owned financial institutions. And second, the full implementation of the Non-Performing Loan (NPL) resolution strategy, which is already contributing to reduction of the high levels of impaired assets in banks' loan portfolios," Roaf said.