Drawing the full amount would bring total disbursements under the program to SDR 1.55 billion (about €1.77 billion, or US$2.39 billion). In completing the review the Board also approved Serbia’s request for a modification of the end-September quantitative performance criterion. The Board also completed the financing assurances review.

Serbia’s initial 15-month SBA was approved on January 16, 2009, in the amount of SDR 350.8 million (about €402.3 million, or US$542.2 million).

On May 15, 2009, the arrangement was extended by one year and augmented to SDR 2.6 billion (about €2.98 billion, or US$4.02 billion to support the government's economic program amid a sharper than expected impact from the global financial crisis (see Press Release No. 09/169).

Following the Executive Board’s discussion on Serbia, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, said:

“Serbia’s commendable performance under its economic program supported by the Fund’s Stand-By Arrangement has helped in addressing the spillovers from the global financial crisis while establishing a moderate economic recovery. An accelerated pace of structural reforms will help to strengthen medium-term growth and employment prospects, supported by the resumption of adequate capital inflows, in particular through foreign direct investment.

“Despite the moderate recovery, inflation has accelerated, mainly as a result of increasing food prices. The authorities have appropriately tightened the monetary stance in line with their inflation-targeting framework and to bolster the framework’s credibility.

“The fiscal responsibility legislation submitted to Parliament seeks to anchor fiscal policy over the medium term once the program with the Fund expires. The fiscal program appropriately envisages a budgetary target with some scope for a gradual exit from the freezes of nominal public wages and pensions beginning in January of 2011.

“It is now timely to gradually phase out emergency arrangements introduced to support economic activity as the financial sector is emerging from the global financial crisis. Exposure commitments under the European Bank Coordination Initiative have been adequately relaxed. It is also time to start phasing out credit support programs introduced in the wake of the crisis.