Government proposes freezing of budget wages

The government has proposed to freeze the funds for budget wages in 2008 at the November 2007 level.

Izvor: B92

Friday, 06.07.2007.

17:55

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Government proposes freezing of budget wages

“Even after freezing the salary funds, next year the wages of those paid from the budget will be in between 12-15 percent higher than for this year,” Finance Minister Mirko Cvetković said.

Inflation, according to the government’s projections, should be decreased to six percent from this year’s projected 6.5 percent in 2008, and subsequently taken down to five and four percent in 2009 and 2010.

“Salary expenditure untenable”

In an interview with B92, the International Monetary Fund (IMF) Belgrade office Resident Representative Harold Hirschhofer said the current salary growth in public sector in Serbia, which is at an average of 30 percent, was unsustainable.

“Salary expenditures grow dramatically, and at exceptionally high speed. It is quite clear that this is unsustainable. Government of the Republic of Serbia needs to take that into consideration. If not this year, then certainly, the next,” Hirschhofer said.

He praised Serbia’s monetary policy as “very successful”, with inflation reduced to the levels where “NBS’ projected inflation goals can be easily achieved.”

“Now, it is necessary to keep low inflation levels, and for that the central bank needs clear support of a good fiscal policy. If such support is missing, if deficit is to be larger than last year’s, then monetary policy measures will have to be even more strict, whether by increasing mandatory reserves or repo rate,” Hirschhofer said.

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