International Monetary Fund (IMF) Resident Representative in Serbia Bogdan Lissovolik said Saturday the country's main challenge in the coming period was to maintain fiscal responsibility, especially in view of the coming election, and to improve the business environment.

Lissovolik spoke at the summer Vivaldi Forum on the Mokra Gora mountain, western Serbia, where he pointed out that the government will have to stick to the rules limiting the budget deficit in 2012 and keep track of the public debt, particularly because the property restitution process has yet to start.

The restitution should not threaten Serbia's fiscal situation and should be conducted in a responsible way, he added. Serbia's public debt is limited to 45 percent of the GDP, excluding the restitution, he remarked.

Government efficiency should also improve, besides maintaining fiscal responsibility, said Lissovolik.

An inefficient government cannot control the deficit, and so if the deficit crosses the limit, it will indicate inefficiency in the government, he explained. The two-year Stand By Arrangement with the IMF, which expired in April, helped prevent a financial crisis, preserve the stability of the banking sector and keep expenditure at a sustainable level by freezing salaries and pensions, Lissovolik stated.

However, structural reforms within the economy are yet to come, he added. In order to improve the business environment, government companies have to be privatized, needless regulations should be repealed faster, the obstacles regarding the use of construction land need to be removed and the labour market reformed, he explained.

The IMF official listed healthcare and education rationalization, government company domination and poor market competition as some of the examples of reforms not yet conducted by the government.