IMF: A new program is needed to suppress the gray economy in Serbia, inflation will decrease, GDP will increase

The Head of the Office of the International Monetary Fund (IMF) in Serbia, Julija Ustjugova, said today in Belgrade that it is necessary to “maintain the reform momentum” and adopt a new Program to combat the gray economy, which will also be significant for the introduction of eFiscalization and eInvoices.

At the panel discussion “Macroeconomic trends in 2023”, which was organized by NALED’s Alliance for Fair Competition, she said that the IMF for growing economies in Europe, including Serbia, predicts a reduction in the rate of economic growth from 4.3 percent in 2022. to less than two percent this year, but that it is expected that a reversal in the downward trend will occur already in the second half of the year and that it will continue in 2024.

The IMF expects that inflation in both Europe and Serbia will fall during this year thanks to lower energy and food prices, according to the announcement.

Ustyugova pointed out that monetary policy measures should continue to work actively to lower inflation, while fiscal policy should help that goal and provide a reserve for future crisis situations, which are becoming more frequent.

The Chief Economist of OTP Bank in Serbia, Dragoslav Veličković, and the director of the asset and liability management sector at Erste Bank, Miloš Zečević, agree that in 2023, there will be no major changes in the exchange rate of the euro and the dinar in Serbia because foreign exchange reserves are at a very high level. exports are growing faster than imports and all the prerequisites are there for the exchange rate to remain stable.

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They expect slightly lower economic growth in 2023 compared to the projections of the IMF and the Ministry of Finance and predict that it will be around 1-1.5 percent.

Bearing in mind that the National Bank of Serbia is raising the reference interest rate (currently 5.25 percent), which also affects the interest rates of commercial banks, Zečević predicts that this year the Central Bank of Serbia will increase that rate by a maximum of 0.5 percentage points, which will affect on the reduction of borrowing in dinar cash loans, but that housing loans will also fall due to the expected increase in Euribor to 3.4 percent during the summer, as well as due to high real estate prices.

He added that the banking sector in Serbia has large amounts of free money at its disposal, which will reduce interest on savings, and this is also affected by the interest rates at which banks buy government bonds.

Veličković assessed that the central banks generally started late with measures to curb inflation, that the biggest question is what will happen to inflation, whether it will be suppressed and whether the central banks will start lowering their interest rates in the middle of the year.

Veličković added that energy prices have fallen compared to spring and summer last year, but that they have been rising again in the last two months, which requires caution.

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