Serbia "not close to bankruptcy", but must deal with deficit

BELGRADE Serbia is not close to bankruptcy, but it has to take steps as soon as possible to cut its budget deficit down to a reasonable level. This cannot be done without reducing pays and pensions, World Bank (WB) Country Manager for Serbia Loup Brefort has said. Serbia "not close to bankruptcy", but must deal with deficit Since salaries and pensions make up over 50 percent of the budget expenditure, Brefort sees no way of lowering the budget deficit without taking that into consideration. It could be a part of a set of measures that would reduce the deficit to a reasonble level, he told Radio and Television of Serbia. The government needs to take steps to reduce the deficit, because the faster it is done, the sooner the results will come, he stressed. The WB is encouraged by the fact the government is discussing these steps, he noted, adding that it was a good thing and that the WB would encourage the government to implement those measures in June, and not September. The measures will not be popular, but they are necessary to cut budget expenditure. The government stated early this year that the deficit would be 3.6 percent of GDP, but the IMF has now estimated that if nothing is done, the deficit could reach 8 percent of GDP by the end of the year, which is something Serbia cannot afford, Brefort pointed out. The WB proposed that municipalities take over some fiscal discipline by controlling pay levels and the number of employees in the public sector, reducing subsidies to government companies and demanding greater efficiency from them, he stated. Still, Serbia is not close to bankruptcy, as it has its foreign exchange reserve and will be able to meet its obligations, but the WB is concerned about the trend, he said. International investors could change their opinion of Serbia if the budget deficit continues to grow, he underscored. Loup Brefort (Beta, file) Tanjug

Serbia "not close to bankruptcy", but must deal with deficit

Since salaries and pensions make up over 50 percent of the budget expenditure, Brefort sees no way of lowering the budget deficit without taking that into consideration.

It could be a part of a set of measures that would reduce the deficit to a reasonble level, he told Radio and Television of Serbia.

The government needs to take steps to reduce the deficit, because the faster it is done, the sooner the results will come, he stressed.

The WB is encouraged by the fact the government is discussing these steps, he noted, adding that it was a good thing and that the WB would encourage the government to implement those measures in June, and not September. The measures will not be popular, but they are necessary to cut budget expenditure.

The government stated early this year that the deficit would be 3.6 percent of GDP, but the IMF has now estimated that if nothing is done, the deficit could reach 8 percent of GDP by the end of the year, which is something Serbia cannot afford, Brefort pointed out.

The WB proposed that municipalities take over some fiscal discipline by controlling pay levels and the number of employees in the public sector, reducing subsidies to government companies and demanding greater efficiency from them, he stated.

Still, Serbia is not close to bankruptcy, as it has its foreign exchange reserve and will be able to meet its obligations, but the WB is concerned about the trend, he said.

International investors could change their opinion of Serbia if the budget deficit continues to grow, he underscored.