Nov. 25 (Bloomberg) -- Serbia completed “technical” talks with the International Monetary Fund, agreeing to adopt and send its 2011 budget plan to parliament by Dec. 15, Finance Minister Diana Dragutinovic said.
The Balkan nation, which took a 3-billion euro bailout loan led by the Washington-based lender last year, needs to issue a formal government statement accepting various policy elements for the fund to consider the commitment valid for a “staff-level” agreement, which would allow the IMF board to consider paying out the next installment of the credit, she said.
“Technical level talks with the IMF closed in the early morning hours and it was agreed that the 2011 budget should be adopted and submitted to parliament by Dec. 15,” Dragutinovic told lawmakers in Belgrade today.
A staff level agreement is needed to complete the sixth review of whether Serbia is meeting the terms of the loan. Serbia is struggling to emerge from its worst recession in the past decade and the government is trying to reduce spending and boost tax collection without cutting too many popular social benefits a year ahead of general elections.
An IMF mission left Belgrade earlier this month without completing the review, leaving the government time to work out a plan which targets a gap of 140 billion dinars ($1.78 billion), or 4 percent of gross domestic product, Dragutinovic said. Serbia hopes to meet with the IMF board on Dec. 22.
In addition to the budget, Serbia needs to return to lawmakers a pension law that gradually reforms the existing pay-as-you-go-system toward a more sustainable financing mechanism. The government and the IMF both “found it acceptable” for the average pension to be set at 27 percent of the average wage, she said.
Changes in the retirement age for women will be delayed by two years, to 2013, and a “standard pension” will require 40 years of service, Dragutinovic said.
In October, the government withdrew a proposed pension overhaul from parliament amid talks with the IMF. Trade unions have threatened to collect signatures to force a national referendum if the legislation goes through parliament.
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