September 19, 2017 / 2:53 PM / 10 months ago

UPDATE 1-IMF revises Serbia's 2017 growth forecast to 2.3 percent

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BELGRADE, Sept 19 (Reuters) - The IMF on Tuesday cut its Serbian economic growth forecast for 2017 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.

The International Monetary Fund kept its 2018 forecast for the Balkan country’s economic growth at 3.5 percent.

“Economic activity continues to expand, notwithstanding a temporary slowdown ... in this context, we project growth of 2.3 percent in 2017, increasing to around 3.5 percent in 2018,” IMF mission head James Roaf said in a statement.

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 the budget deficit.

In the statement, Roaf said the IMF mission, which arrived on Sept. 13, had reviewed the country’s finances, spending plans for 2018 and structural reforms. The eighth and final review of the loan deal is slated for late October.

So far in 2017, Serbia has enjoyed a strong fiscal position, paving the way for discussions on investment, raising of public wages and pensions, a reduction in labour taxes and faster debt cutting, the statement said.

Also on Tuesday, Prime Minister Ana Brnabic said the government was ready for a “significant increase” in public sector wages, but she declined to elaborate.

Earlier this month, Brnabic said Belgrade was examining whether to seek a new loan deal with the Washington-based lender after the current arrangement expires in February. (Reporting by Aleksandar Vasovic; Editing by Ivana Sekularac and Hugh Lawson)

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