"New government will have to put out fire"
A new government should conduct reforms over the next two to two-and-a-half years in order to direct the economy towards development, says an expert.
Monday, 07.05.2012.
17:03
A new government should conduct reforms over the next two to two-and-a-half years in order to direct the economy towards development, says an expert. Economic Institute associate Miladin Kovacevic also noted on Monday that "when it comes to the economy, the new government will face an emergency in terms of putting out a fire, mostly when it comes to consolidating the budget and public finances in general." "New government will have to put out fire" "It will have to adopt short-term measures, but also systemic ones, immediately after coming to power," Kovacevic told Tanjug news agency in an interview. It will have to come out with a short-term programme first, one that would stop the growth of the budget deficit and debt, he noted. Those short-term steps should help limit the budget and its deficit to the figures agreed with the International Monetary Fund, Kovacevic remarked. New forms of taxes and higher existing taxes are just some of Kovacevic's recommendations. He stated that a VAT increase could also be one of those short-term measures. According to Kovacevic, it could "put out the fire," but it is not a solution that would bring long-term results and budget revenue. A solution does not lie in introducing indirect taxes either, because they could lower the standard of living further and lead to price rises, he added. Short-term steps cannot solve the issues like the public debt, public finance sustainability, reduction of the government's social function, increase in employment and growth of the GDP, he believes. That requires a general reform of the system and public sector, he stressed. Without those and without an "overhaul" of the fundamental laws, like the laws on restitution, property, development bank, pension system and fiscal system, there will be no room for capital investments, like those in infrastructure, which should provide momentum for the economy, employment and private foreign investments, this expert explained. Serbia has two to two-and-a-half years left to conduct reforms and avoid the "cruel" scenario witnessed in Greece and Spain, Kovacevic pointed out. Tanjug
"New government will have to put out fire"
"It will have to adopt short-term measures, but also systemic ones, immediately after coming to power," Kovačević told Tanjug news agency in an interview.It will have to come out with a short-term programme first, one that would stop the growth of the budget deficit and debt, he noted.
Those short-term steps should help limit the budget and its deficit to the figures agreed with the International Monetary Fund, Kovačević remarked.
New forms of taxes and higher existing taxes are just some of Kovačević's recommendations. He stated that a VAT increase could also be one of those short-term measures.
According to Kovačević, it could "put out the fire," but it is not a solution that would bring long-term results and budget revenue.
A solution does not lie in introducing indirect taxes either, because they could lower the standard of living further and lead to price rises, he added.
Short-term steps cannot solve the issues like the public debt, public finance sustainability, reduction of the government's social function, increase in employment and growth of the GDP, he believes.
That requires a general reform of the system and public sector, he stressed.
Without those and without an "overhaul" of the fundamental laws, like the laws on restitution, property, development bank, pension system and fiscal system, there will be no room for capital investments, like those in infrastructure, which should provide momentum for the economy, employment and private foreign investments, this expert explained.
Serbia has two to two-and-a-half years left to conduct reforms and avoid the "cruel" scenario witnessed in Greece and Spain, Kovačević pointed out.
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