The impact of loans from international financial institutions on the economy of Serbia

Abstract

The rapid foreign credit growth has been one of the main drivers of growth in Serbia in recent years. As growth has accelerated, the Serbian economy has become burdened with considerable external imbalances and current account deficits. As a result of the growing debt financing of the external deficit, the foreign debt rose to 22.7 billion EUR in late December 2009. Since the gains from privatization in the 2008-2010 period are not means of servicing the loans that could be counted on in the long run, the issue of sustaining the existing dynamics of paying off the foreign loan has been brought into question. International financial organizations have an important role in Serbia’s economic development and convergence with the European Union. Its resources have been mainly focused on spurring economic growth and promoting the policies that stimulate foreign direct investment and create employment, restructuring and ownership change in the enterprise sector.

Keywords

• foreign debt
• economic growth
• current account deficits
• international financial organizations
• structural reforms