"Without urgent measures, Serbia's on path to bankruptcy"

BELGRADE -- Serbia will be on a path to bankruptcy unless immediate measures are carried out with a view to reducing the budget deficit.

This was heard from President of the Fiscal Council Pavle Petrović, who spoke for B92 on Tuesday.

Public finance is not in a good state, the deficit is starting to increase again and the public debt is growing as well, and this is unsustainable, Petrović said.

If we continued this way, we would not be able to take out loans abroad, which would result in a considerable drop of production and inflict much more damage than if it was done gradually and on time.

In this case, salaries and pensions would drop to a considerable extent, Petrović said and added that unless something is done immediately, public finance in Serbia will no longer be sustainable in another six to seven months.

He said that Serbia is now paying the price of the failure to carry out reforms earlier, and the main mistake is that the public sector has not been reformed.

Petrović recalled that the Fiscal Council warned against this possibility as far back as March and that the package of measures which the government prepared in late April proved insufficient.

Although he backed urgent preparation of a budget review and control of salaries and pensions as main pillars in 2013 and 2014, Petrović said that Serbia is constantly getting into cycles of pension and salary checks instead of launching serious reform changes in the pension system, public enterprises and public sector employment.

“If you do not want to go back to freezing of salaries and pensions every time, then you need to swallow the pill once and for all which is not altogether bitter and the results will become evident in two to three years, Petrović said.