Serbia’s general government deficit target “was missed by a small amount,” while the 2012 fiscal deficit will be “significantly higher” than targeted because of insufficient spending cuts after the budget was approved, the IMF said in a statement today.
The government’s budget gap target for 2011 was set at 4.5 percent of gross domestic product and it is projected to narrow to 4.25 percent of GDP this year. The government has not yet published the end-2011 budget data.
“Amid faltering euro area economic activity, Serbia’s GDP is projected to grow by 0.5 percent this year, with high and rising unemployment being a key concern,” the IMF said.
Serbia’s economy is estimated to expand 1.9 percent in 2011 after a 0.8 percent growth in the third quarter, according to preliminary estimates. Unemployment rose to 23.7 percent last year from 20 percent in 2010.
Prime Minister Mirko Cvetkovic said yesterday Serbia’s $1.3 billion precautionary loan program with the IMF will stay frozen until parliamentary elections, planned for early May, are completed. He pledged that his government will stick to the agreed debt and deficit targets.
“Maintaining debt sustainability requires effective and credible medium-term fiscal consolidation,” the IMF said.
The public debt-to-GDP ratio is forecast to exceed the national limit of 45 percent of GDP at the end of this year, the IMF said.
Unchanged spending policies will fuel Serbia’s public debt to 53 percent of GDP by 2016, and it will top 50 percent this year, the lender said in October. The estimate was based on the assumption that Serbia’s economy will grow 2 percent this year.
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