C. bank chief warns of debt crisis

National Bank of Serbia Governor Radovan Jelašić warned that Serbia could enter a serious debt crisis if it continues taking out foreign loans at this rate.

Izvor: Dnevnik

Saturday, 31.10.2009.

12:03

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National Bank of Serbia Governor Radovan Jelasic warned that Serbia could enter a serious debt crisis if it continues taking out foreign loans at this rate. “In the first eight months of the year, the public debt was increased by six percent and totals 32 percent of the gross domestic product (GDP), which is still not a lot. The speed of new debts is what is dangerous, because at this rate, it could lead to a debt crisis,” he told daily Dnevnik. C. bank chief warns of debt crisis Jelasic said that the agreement between the Serbian government and the International Monetary Fund for the budget deficit to not go over four percent of the GDP next year is sustainable, but that all the risks have not been removed yet. “The road which Serbia chose—to not increase taxes, but to decrease the deficit exclusively by decreasing spending—allows us a somewhat larger budget deficit, but under the condition that the terrain is prepared for a lasting decrease in public spending,” Jelasic said. However, he reminded that there are not many confirmations that such intentions were successfully realized in the past. “If we do not decrease the number of employees in the state administration, and do not reorganize the pension system, the only thing left will be empty promises which will lead us to an even greater public debt,” Jelasic said.

C. bank chief warns of debt crisis

Jelašić said that the agreement between the Serbian government and the International Monetary Fund for the budget deficit to not go over four percent of the GDP next year is sustainable, but that all the risks have not been removed yet.

“The road which Serbia chose—to not increase taxes, but to decrease the deficit exclusively by decreasing spending—allows us a somewhat larger budget deficit, but under the condition that the terrain is prepared for a lasting decrease in public spending,” Jelašić said.

However, he reminded that there are not many confirmations that such intentions were successfully realized in the past.

“If we do not decrease the number of employees in the state administration, and do not reorganize the pension system, the only thing left will be empty promises which will lead us to an even greater public debt,” Jelašić said.

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