Mr. Dominique Strauss-Kahn, Managing Director of the IMF, today announced that the IMF and Serbian authorities have reached an agreement to provide $518 million “under a 15-month precautionary Stand-By Arrangement.” The Serbian economy has remained relatively stable despite the financial crisis. Nonetheless, the loan, which the Serbian government will only draw upon if the need arises, will “maintain investor and market confidence."
Mr. Strauss-Kahn noted that the Stand-By Arrangement “is intended to support the policies aimed at maintaining macroeconomic and financial stability.” Such policies “involve fiscal restraint, with a deficit limited to 1½ percent of GDP next year; monetary policy focused on containing inflation; financial sector measures to preempt and, if necessary, react to possible threats to stability; and structural reforms to boost the economy’s growth and export potential.” The arrangement is still subject to approval from the IMF Management and Executive Board.
On Saturday the IMF announced its agreement with Pakistan to provide $7.6 billion in financial aid. To date, within the context of the international financial crisis, the IMF has committed to provide aid to Iceland, the Ukraine, and Hungary. Earlier this year the IMF also entered into a $750 million stand-by arrangement with Georgia in the wake of its conflict with Russia.