Page 149 - SE Outlook Regions 2023

The European Commission said expects Serbia’s general government
deficit to remain at around 4% of GDP in 2022 and to only slowly
decline thereafter. “Supported by high nominal GDP growth, the
debt-to-GDP ratio is expected to gradually fall throughout the forecast
horizon," the report said.

Serbian Finance Minister Sinisa Mali said in November that in 2023
Serbia will repay a maturing debt of €4.6bn through new loans and
bond issues on the domestic market.

At the end of the second quarter, Serbia’s external debt stood at 67.7%
of GDP, up from 67.5% of GDP in the previous quarter, according to
central bank data.

“About €4.6bn of direct debt obligations are due next year, of which
67% is internal debt, 10% are obligations to the World Bank, the
European Investment Bank and other international financial institutions,
and 16% are from bilateral agreements,” Mali said in an interview with
Politika.

Mali said that Serbia does not have high interest rates on its debt and
expects that the share of loan interests in GDP for the next few years to
remain below or around 2%.

“This ratio has been halved in the last few years. At the end of 2022, it
will amount to about 1.6% of GDP, and in 2015 it was as much as 2.9%
of GDP,” Mali said.

In November, Serbia reached a €2.4bn 24-month Stand-By
Arrangement (SBA) with the IMF.

The SBA replaced the existing non-financial 30-month Policy
Coordination Instrument (PCI), approved by the IMF in June 2021 and
will build on the PCI reform agenda.

The SBA still has to be endorsed by the IMF executive board, which is
expected to consider it in December.

“This arrangement would help address emerging external and fiscal
financing needs given the challenging global economic environment
and support the authorities’ macroeconomic policies and structural
reform efforts, with a focus on the energy sector,” the IMF said.

Serbia intends to use the financing that will become available during the
first part of the arrangement and to treat the remaining access as
precautionary.

149 SE Outlook 2023 www.intellinews.com