Belgrade--Serbia's central bank cut Thursday its key interest rate to 7.5 percent in an effort to boost the investment climate and revive the country's ailing economy.
The National Bank of Serbia (NBS) said in a statement it had decided to cut interest rate by 0.5 percentage points "considering the increased investor interest to invest in Serbia following fiscal consolidation measures and structural reforms as well as the concluded precautionary agreement with the International Monetary Fund."
It said these trends along with inflation at around its four percent target opened up space for a rate cut to contribute to a long-term sustainable recovery, the statement said.
Last month the IMF approved a three-year 1.2 billion euro ($1.27 billion) credit line for Serbia to support its structural and economic reforms, notably to reduce debt and budget deficits and boost the economy's growth potential and competitiveness.
As the Serbian economy contracted in 2014 -- its third recession in the last six years -- the government budget deficit rose to 6.6 percent of GDP and public debt topped 70 percent of GDP.
In October Serbia introduced a number of austerity measures, including a 10 percent cut in pensions and public sector monthly wages above 200 euros.
In the European country of 7.2 million people, more than 700,000 are employed in the public sector while 1.7 million are pensioners. For every person employed, there are five either receiving pensions or unemployed.
AFP
