IMF issues upbeat
view of Serbian economy
November 7, 2007
SERBIANNA
Chief of IMF mission to Serbia, Paul Hilbers, said that Serbia's economic
growth for 2007 is robust while inflation has been reduced to below 4.5%
from 14% that was 2 years ago and thenurged the government to cut spending
in 2008 and speed up the privatization.
At a press conference, Hilbers also warned that the growth was not even
across sectors citing that Serbia's mix of a loose fiscal spending, tight
money and slow structural reforms create risks of sustainability of growth.
Hilbers believes that Serbia must have a budges suficit of at least
1% of GDP in 2008 in order to sustain the growth.
The IMF mission chief also noted the growth in real wages that exceed
productivity gains suggesting that the discrepancy is fueling a robust
growth in domestic demand which is met by growth of imports. Growth in
imports is partially met by foreign borrowing which is increasing the indebtedness
of the nation.
Echoing the IMF assessment, Serbian Deputy Prime Minister Bozidar Djelic
noted that the expected 7% growth puts Serbia as the highest growth economy
in Europe.
Despite the current 21% unemployment, Djelic said that the trend is
down from 70% just few years ago and said that Serbia is well on the way
of sustainable growth which, according to him, will be "based on expertise,
energy efficiency and recycling of secondary raw materials."
Djelic said that funds for building a highway called Corridor 10 have
been secured and the project could be done in 3 years and can be a boon
for the southern Serbia. Ethnic Albanians in southern Serbia, however,
are threatening violence.
Djelic noted that an average salary in Serbia is about €350 that
is higher then in Bulgaria which is an EU country. Djelic blamed Serbia's
high foreign trade deficit on gas and oil imports.
Official IMF report on Serbia is expected in January. |
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