Last week, the IMF Executive Board announced its approval, pursuant to authority under the IMF’s Emergency Financing Mechanism, of Serbia’s aid request under the terms of a 15-month Stand-By Arrangement “aimed at maintaining macroeconomic and financial stability.” Although Serbian authorities had initially requested $518 million in financial aid, the IMF approved a $530.3 million financing package. The Serbian government, however, “intend[s] to treat the arrangement as precautionary” and will only draw upon the IMF’s loan if needed.

The framework of the Arrangement will focus on implementing measures aimed to achieve generally the following:

  • maintain market confidence;
  • contain inflation; and
  • strengthen crisis preparedness.  

Under the Arrangement the Serbian government has also agreed to adopt reforms intended to “boost the economy’s supply side.” Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated that the Stand-By Arrangement “is an appropriate response to the current challenges, and seeks to safeguard macroeconomic and financial stability through a comprehensive policy package. Determined implementation of this program should poise the Serbian economy to resume more balanced and sustained real income growth.”

Also last week the IMF released a survey in which it addressed its measures taken thus far to “counter crisis fallout in emerging Europe,” and outlined generally fiscal measures to be adopted by European governments in order to overcome the recession.”