IMF official warns about wage hikes

IMF's Albert Jaeger says that he is skeptical about a proposal to allocate less budget funds for pensions, if they were harmonized with the public sector wages.

Izvor: Tanjug

Thursday, 25.02.2010.

10:41

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IMF's Albert Jaeger says that he is skeptical about a proposal to allocate less budget funds for pensions, if they were harmonized with the public sector wages. Jaeger, who headed an IMF mission that recently finished their visit to Serbia, said that the IMF expects strong guarantees that the increase of wages and pensions will be in accordance with the budget. IMF official warns about wage hikes The Serbian government and the visiting IMF delegation this week announced they reached agreement during their third-revision talks, concerning the standby arrangement overall worth EUR 2.9bn. “The biggest problem is what would happen with wages in the public sector. They were frozne last year, while there will be elections in 2012. There's the risk they will go up, and pensions as well, which will cause great spending and pose a great risk to the budget,” said Jaeger in a statement for RTS. Jaeger said that it is easy to calculate the expense, because the increase of wages of only one percent means seven billion dinars more expense for the budget, “which is a lot”. Responding to a question on what conditions would the IMF accept harmonization of the pension growth with the public sector wage growth, Jaeger said that clear and strong guarantees are needed that the increase of wages in the public sector, once linked with the increase of pensions, will be moderate and in keeping with the agreed program and budget. Meanwhile, Deputy Prime Minister Jovan Krkobabic, who was elected on the Pensioners' Party (PUPS) ticket, said that during the two-week talks the IMF accepted in principle the offered solution, but that they need additional clarification on what the public sector does. The question here is whether something is fair and whether something is objective, said Krkobabic, adding that if the public sector wages grow slowly, the pensions would also be increased.

IMF official warns about wage hikes

The Serbian government and the visiting IMF delegation this week announced they reached agreement during their third-revision talks, concerning the standby arrangement overall worth EUR 2.9bn.

“The biggest problem is what would happen with wages in the public sector. They were frozne last year, while there will be elections in 2012. There's the risk they will go up, and pensions as well, which will cause great spending and pose a great risk to the budget,” said Jaeger in a statement for RTS.

Jaeger said that it is easy to calculate the expense, because the increase of wages of only one percent means seven billion dinars more expense for the budget, “which is a lot”.

Responding to a question on what conditions would the IMF accept harmonization of the pension

growth with the public sector wage growth, Jaeger said that clear and strong guarantees are needed that the increase of wages in the public sector, once linked with the increase of pensions, will be moderate and in keeping with the agreed program and budget.

Meanwhile, Deputy Prime Minister Jovan Krkobabić, who was elected on the Pensioners' Party (PUPS) ticket, said that during the two-week talks the IMF accepted in principle the offered solution, but that they need additional clarification on what the public sector does.

The question here is whether something is fair and whether something is objective, said Krkobabić, adding that if the public sector wages grow slowly, the pensions would also be increased.

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