DUŠAN VUJOVIĆ: The Reforms Must Go On, Interview – Diplomacy & commerce

The sustainability of good economic results should not be taken for granted. The utmost priority is continuing structural reforms to reach and consolidate investment grade level in international markets and attract large institutional investors. This is the only safe road to the EU, and a base for future prosperity and better living.

Serbia has never been closer to completing reforms and never had more at stake than today, says Dušan Vujović, the outgoing Serbian Minister of Finance, who believes that getting into clinch with unfinished structural reforms is a challenge that can be compared to the Odysseys. “We must resist the temptation of following the pressures of popular demands that may draw the reform ship to the Charybdis rocks and destroy it”, says Vujović. Our history of unsuccessful attempts to finish reforms says a lot about the cost which might have to be paid again.

Does Serbia needs IMF “policing” or advice?

— After three years of exemplary macroeconomic results, Serbia has demonstrated that it does not need policing in the area of fiscal and monetary performance. But it still needs a strong and credible external partner to sustain the reform effort beyond the successful completion of the fiscal consolidation program.

The likely themes of continued collaboration with the IMF include resolution of state owned banks, enterprises and public utility companies, continued tax administration reform, more efficient tax system, better assessment of fiscal risks, new public employment and wage laws, observance of rules against money laundering, reduction of informal economy, and further NPL resolution.

The preferred format of the program is the new Policy Coordination Instrument (PCI) which allows dialogue on the full reform agenda without access to financing which Serbia does not need due to strong external and fiscal balances.

Will reform dynamics lose momentum if there is a gap between the previous and the new IMF arrangement?

— The IMF team is scheduled to complete their visit in mid-May. If the new program is concluded during the summer and its key parameters are reflected in the 2019 budget, which will be prepared in line with the schedule envisaged in the Budget System law (submission to Parliament by November 15), there will be no gap in the dynamics. Even if the program is approved few months later, the delay may not affect its effectiveness provided a true agreement on essential elements of the program are soon reached and adhered to. In addition to the main parameters of the next year budget, especially on the expenditure side, these elements include most of the often mentioned themes that are critically important for completing institutional and structural reforms.

Whole interview is available at: http://www.diplomacyandcommerce.rs/prof-dusan-vujovic-phd-outgoing-minister-of-finance-the-reforms-must-go-on/