Tuesday, 21 February 2012

Ninety-Sixth Sitting of the Finance Committee

At the sitting held on 21 February, the Finance Committee reviewed the impact of the delayed audit of the arrangement with the IMF and measures to maintain economic stability in the country.


Prime Minister of the Republic of Serbia and Minister of Finance Mirko Cvetkovic, Governor of the National Bank of Serbia Dejan Soskic and President of the Fiscal Council of the Republic of Serbia Pavle Petrovic were in attendance.

Prime Minister and Minister of Finance Mirko Cvetkovic stressed that the IMF delegation’s visit was technical in nature and not concerned with the audit of the arrangement or its extension, rather the IMF came to asses the completion of 2011, current trends and predict what 2012 may hold. He denied the claims heard in the public that the talks with the IMF had been unsuccessful and that the Government would exceed the expenditure planned by the budget. The Prime Minister and Minister of Finance said that there has been some dispute with the IMF regarding the recapitalization of the Commercial Bank, amount of guarantees issued by the state for public companies’ loans and ongoing projects, as well as risk assessment for 2012, but the disputed points have no financial impact on the current period, the fiscal policy pursued was identical to that established by the rules and the deficit planned by the budget would be maintained. Cvetkovic stressed that the relations between the Government and IMF were good and their cooperation was constructive.

The Governor of the National Bank of Serbia Dejan Soskic stressed that the IMF mission which visited Serbia did not have a negotiating mandate. It is important that Serbia renews the talks on the arrangement audit as this sends a positive signal to the international investment public, said Soskic adding that in the meantime it was important to conform to the IMF agreement as regards expenditure trends and budgetary discipline.

The President of the Fiscal Council of the Republic of Serbia Pavle Petrovic said that keeping to the established deficit called for a decrease in the expenditure planned by the deficit. The duty of budget rebalance falls to the future Government, as does the establishment of medium-term fiscal reform plan because even if we were to keep to the established deficit the public debt by the end of 2012 would still reach 51% GDP, and by 2015 it might even reach 60% GDP unless there is serious fiscal reform, concluded Petrovic.

In the course of the ensuing debate the Committee members spoke about the audit of the IMF arrangement, they debated whether the Budget Law has exceeded the scope agreed on with the IMF and possibly completing the budget rebalance before elections were called. They also asked about the situation in the banking sector, structure of foreign exchange reserves and disputed points with the IMF delegation as regards the guarantees issued by the state for public companies’ loans and ongoing projects.

The sitting was chaired by the Committee Chairman, Zoran Krasic.


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