IMF opens bailout talks with Serbia

By bne IntelliNews November 14, 2012

bne -

An International Monetary Fund (IMF) delegation to Serbia on November 13 opened talks with the government over a new financial aid package for the cash-strapped country.

The new Socialist-Progressive government has pledged to put a fresh IMF deal in place to shore up the struggling economy. The previous government saw an existing €1bn programme frozen at the start of the year due to the country's debt and deficit levels rising above targets.

With state debt at 49.6% of GDP - 4.6 percentage points above Serbia's constitutional limit - and a 2012 budget deficit set to come in over 7% of GDP, Belgrade is trying to bring its fiscal position under control to prevent a financial meltdown. During the talks, which are set to finish on Novemebr 20, the IMF will consider the government's deficit target of 3.6% in its draft 2013 budget.

The talks will, however, not immediately lead to an agreement on a standby loan. The negotiations are set to continue should Serbia meet the necessary conditions, the IMF's permanent country representative Bogdan Lissovolik has said.

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