Jelašić: Cutting jobs won’t be enough

National Bank of Serbia (NBS) Governor Radovan Jelašić said cutting thousands of workers from the state administration will not be enough to meet budget goals.

Izvor: Beta

Saturday, 19.09.2009.

09:38

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National Bank of Serbia (NBS) Governor Radovan Jelasic said cutting thousands of workers from the state administration will not be enough to meet budget goals. Jelasic said that even if 10,000-14,000 people lose their jobs in the state administration and public companies, the conditions of the International Monetary Fund (IMF) for the budget deficit in 2010 will still not be met. Jelasic: Cutting jobs won’t be enough He told daily Danas that if this many people are made redundant, only about RSD 10-12bn (about EUR 108-130mn) will be saved, which is only a third of the money needed. Jelasic said that according to the IMF proposal, the Serbian budget deficit in 2010 should remain under 3.5 percent of the gross domestic product (GDP), which means that an added RSD 30-40bn (EUR 326-434mn) must be saved. “If we have backed away from increasing Value Added Taxes (VATs), the alternative could be tax income,” Jelasic said. He said that an agreement with the IMF will surely be reached; stating that he hopes that Serbia’s negotiators will effectively used the next five weeks to work on a plan for finishing the talks successfully and in a short period of time. “If an agreement is reached by the end of October with the IMF, then the government will have the difficult task of realizing all the promises in practice, because that is a prerequisite for withdrawing the second and third installments of the stand-by arrangement,” he said. He said that it would not be good if the money meant for investments went to spending, but said that this is the reality in Serbia currently, and that he would behave similarly if he was the finance minister. “If that trend was to continue, we would be facing problems in three to four years with paying off not only credit, but interest as well,” the NBS governor said. Jelasic told Danas that new regulations are being planned to be introduced by the NBS on October 1 for further stimulating the crediting by banks. Radovan Jelasic (FoNet archive)

Jelašić: Cutting jobs won’t be enough

He told daily Danas that if this many people are made redundant, only about RSD 10-12bn (about EUR 108-130mn) will be saved, which is only a third of the money needed.

Jelašić said that according to the IMF proposal, the Serbian budget deficit in 2010 should remain under 3.5 percent of the gross domestic product (GDP), which means that an added RSD 30-40bn (EUR 326-434mn) must be saved.

“If we have backed away from increasing Value Added Taxes (VATs), the alternative could be tax income,” Jelašić said.

He said that an agreement with the IMF will surely be reached; stating that he hopes that Serbia’s negotiators will effectively used the next five weeks to work on a plan for finishing the talks successfully and in a short period of time.

“If an agreement is reached by the end of October with the IMF, then the government will have the difficult task of realizing all the promises in practice, because that is a prerequisite for withdrawing the second and third installments of the stand-by arrangement,” he said.

He said that it would not be good if the money meant for investments went to spending, but said that this is the reality in Serbia currently, and that he would behave similarly if he was the finance minister.

“If that trend was to continue, we would be facing problems in three to four years with paying off not only credit, but interest as well,” the NBS governor said.

Jelašić told Danas that new regulations are being planned to be introduced by the NBS on October 1 for further stimulating the crediting by banks.

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