"Budget deficit to total 4 percent of GDP in 2014"
Source: NIN, Tanjug
BELGRADE -- Lazar Krstić has said that he will aim to reduce the budget deficit from this year's 6.5 percent to 4 percent of the GDP at the most in 2014.
In order to achieve this, we will have to implement some less popular measures and we have no other choice if we wish to stop further collapse, the incoming finance minister said in the interview for the new edition of the Belgrade-based weekly NIN.
Krstić said that it is true there is the option for the World Bank to assist finance of the budget deficit and the condition for this is that an adequate budget for 2014 is adopted on time.
This will be one of the first tasks of the Finance Ministry, he underscored.
It is difficult to say what an optimum deficit is but the amount acceptable for the International Monetary Fund (IMF) and the international community is 3 or at most 4 percent of the GDP, Krstić said and added that a bigger budget deficit would hardly be sustainable.
He announced that during the drafting of the 2014 budget, revenues will have to be increased and expenditures would have to be reduced, while at the same time avoiding a negative spiral because of the drop in demand caused by cuts in budget expenditures.
Pensions and salaries in the public sector cannot fully follow the growth of consumer prices, especially as one half of the funds for payment of pensions comes from the budget, Krstić said and explained that there is simply not enough money for the growth funding, which is why a solution needs to be found and plans need to be prepared within the framework. Belts will certainly have to be tightened if public finance is to be stabilise, he noted.
He believes that it would be positive for Serbia to close a new stand-by arrangement with the IMF.
Krstić noted that Serbia must not allow another failure after so many failed expectations, which is why the necessary structural reforms need to be carried out which have been put off for years now.
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