IMF, Serbia discuss access to loan

(AP) — An International Monetary Fund delegation opened talks with Serbia Tuesday to review whether the crisis-stricken country is adhering to the terms of a €2.9 billion ($3.97 billion) standby loan.

Serbia has already drawn €1.12 billion from the loan that was agreed last March. The withdrawal of the rest of the funds depends on the outcome of the current talks.

The government has primarily used the already withdrawn funds to boost its foreign currency reserves.

But, some IMF officials have recently warned that Serbia was running behind schedule with the promised reforms, such as the layoff of some 8,000 government employees, and was spending more money on salaries than envisaged in the loan deal.

The government said in a statement later Tuesday that "all elements of the credit arrangement ... are being carried out in full." It added that Serbia has managed to curb the effects of the economic crisis, and has had better results than other eastern European countries.

As a condition for the emergency loan, Serbia had promised to press on with austere fiscal measures, major reform of the state administration and state pension system.

The government has said it would overhaul the public spending and thus lower the budget deficit.

The Balkan country has been hard hit by the global economic meltdown, which halted foreign investment and further diminished the country's already low export rate.

Serbian officials have expressed optimism that the country was pulling out of recession and would report a mild economic growth later this year.

The talks with the IMF will last for two weeks.

The IMF has also come to the aid of Hungary, Romania, Belarus, and Ukraine throughout the financial crisis.