New government to face budget rebalance, reforms

IMF permanent representative Bogdan Lissovolik says Serbia's new government - to be put together after the May 6 elections - will have to do a budget rebalance.

Izvor: Tanjug

Friday, 20.04.2012.

16:06

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IMF permanent representative Bogdan Lissovolik says Serbia's new government - to be put together after the May 6 elections - will have to do a budget rebalance. This will enable the achievement of the 2012 target deficit and launch comprehensive structural reforms, he stated. New government to face budget rebalance, reforms A new government will have to limit additional indebtedness of the country, adopt a credible program of fiscal adjustment which would return public debt to sustainable frameworks, and launch a major structural reform which is necessary for encouragement of the economic growth, Lissovolik said for the latest edition of Belgrade magazine Biznis. “Economic indicators in the first two months of 2012 were poorer than anyone could have predicted only a few weeks ago. Some of the weaknesses were only temporary due to bad weather in February. As a result, the budget revenues were lower than expected,” Lissovolik said. “In order to resolve this problem, it is necessary to establish firm control of expenditures, and step up efforts to collect both taxes and non-tax revenues. It is necessary to keep the budget under control in order to retain trust of the investors,” Lissovolik stated. Commenting whether the measures that the government adopted late in March are enough to make budget savings, Lissovolik said they are a step in the right direction, but not sufficient given the size of the budget deficit. “We share the opinion of the Fiscal Council that the implementation of some of the measures is risky, and for that reason we believe that austerity will not be realized to the full extent,” Lissovolik underlined. Commenting certain fiscal policy proposals presented in the election campaign, Lissovolik said that in the course of the election campaign various populist proposals and promises were presented, adding that they are the opposite of wise and well-organized fiscal and economic policy. When it comes to considerable increase in minimum wages, which came into effect in April, Lissovolik stated that in the short run this measure looks politically correct, while it actually jeopardizes competitiveness and thwarts the opening of new jobs. Tanjug

New government to face budget rebalance, reforms

A new government will have to limit additional indebtedness of the country, adopt a credible program of fiscal adjustment which would return public debt to sustainable frameworks, and launch a major structural reform which is necessary for encouragement of the economic growth, Lissovolik said for the latest edition of Belgrade magazine Biznis.

“Economic indicators in the first two months of 2012 were poorer than anyone could have predicted only a few weeks ago. Some of the weaknesses were only temporary due to bad weather in February. As a result, the budget revenues were lower than expected,” Lissovolik said.

“In order to resolve this problem, it is necessary to establish firm control of expenditures, and step up efforts to collect both taxes and non-tax revenues. It is necessary to keep the budget under control in order to retain trust of the investors,” Lissovolik stated.

Commenting whether the measures that the government adopted late in March are enough to make budget savings, Lissovolik said they are a step in the right direction, but not sufficient given the size of the budget deficit.

“We share the opinion of the Fiscal Council that the implementation of some of the measures is risky, and for that reason we believe that austerity will not be realized to the full extent,” Lissovolik underlined.

Commenting certain fiscal policy proposals presented in the election campaign, Lissovolik said that in the course of the election campaign various populist proposals and promises were presented, adding that they are the opposite of wise and well-organized fiscal and economic policy.

When it comes to considerable increase in minimum wages, which came into effect in April, Lissovolik stated that in the short run this measure looks politically correct, while it actually jeopardizes competitiveness and thwarts the opening of new jobs.

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