BELGRADE, Sept 29 (Reuters) – Serbia’s fiscal watchdog on Friday forecast the country’s economy would grow between 1.5 and 2 percent this year, below the International Monetary Fund’s prediction of 2.3 percent.
Presenting a report on economic trends and recommendations, the Fiscal Council also said it saw no need for further fiscal tightening next year.
A failure to reform loss-making state owned companies, low investment in infrastructure projects, and unfavourable weather conditions had affected growth in 2017, it said.
Good fiscal returns would allow the Balkan country to increase public sector wages and salaries in 2018.
“(This) is justifiable but it should not be higher than 5 percent,” it said in a statement.
The IMF this month cut its growth forecast to 2.3 percent from 3.0 percent, citing a fall in electricity output in winter and lower than expected crop yields due to months of drought.
Serbia signed a 1.2 billion euro loan deal with the Fund in February 2015 and committed to a series of savings measures aimed at reducing its debt and cutting its budget deficit.
A Fund mission is next month for the final review of the loan deal which expires in February, and government officials said increasing public sector wages and pensions would be the main topic.
Belgrade is still examining whether to seek new IMF loan, Prime Minister Ana Brnabic told Reuters in an interview this month.