PM promises "no further cuts in salaries, pensions"

PM promises "no further cuts in salaries, pensions"

Cuts in public sector salaries and pensions over RSD 25,000 amounting to 10 percent on average were introduced on November 1 with the first budget review for 2014 passed on October 27.

“If we had not initiated deep-seated reforms, there would not be any salaries and pensions in six months,” the prime minister said.

Vucic said that he understands all those people staging protests in the streets and that he knows why and how much they are disgruntled, but underlined that there will be no exceptions from cuts in salaries.

The prime minister said that he is thankful to all citizens who respect, understand and support the government's moves in these difficult times, adding that they know what this government has inherited.

Vucic said that it is his decision to pass this kind of budget, adding that he assumes all responsibility "since many will be angry because the budget is the way it is."

The prime minister thanked the coalition partners for supporting him in drafting a budget that would be the only way for Serbia to recover.

Vucic said that there were two pathways before the government, one that is easier but deceitful, and the second one that implies difficult reforms.

The prime minister said that the government opted for the second path and embarked on tough, deep-seated reforms so that Serbia could record growth in 2017.

The IMF forecasts that Serbia will have a growth of four percent growth in 2016, and over two percent in 2017, he said.

"The budget deficit in the period January-November this year has been reduced by ten percent compared to the same period last year. We have recorded a dramatic VAT increase, which reflects the fight against gray economy, greater collection of excise duties, these are all significant results," said Vucic.

The prime minister has called on MPs to adopt the new review of the budget, which is a result of greater revenues and cuts in expenditures than envisaged by the previous review.

Vucic said that this is not unusual, adding that he hopes that the next year will see several budget reviews that will result from revenue growth.

The prime minister refuted that the government is recouping the losses of airline Air Serbia and Srbijagas.

"We do not recoup any losses of Air Serbia, because Air Serbia has not made a loss, it was done by the Democratic Party's management (of the old national airline JAT), and these losses are the state losses. The government has only noted this and it has to recoup them," said Vucic.

Speaking about the debt of public company Srbijagas, he said that the government must settle this debt even though it was incurred during the rule of the Democratic Party.

"It is important that citizens know all this," the prime minister said, adding that electricity and telephone debts of some ministries have been cleared.

2015 budget proposal

Serbian Finance Minister Dusan Vujovic said Monday that the proposal for the 2015 budget was the first budget to predict savings at all points and was changing the trend of budget revenues, which was beginning to grow, opening the way for Serbia to get out of crisis.

“For the first time in several years, the budget predicts lower nominal expenditures than in the year before. This is a great success for us because the reduction in nominal expenditures is rare,” Vujovic said while presenting the government's budget proposal for next year in the Serbian parliament.

He said that the budget proposal envisages an increase in revenues of RSD 27 billion to RSD 924 billion, and reduction in expenditures by RSD 27 billion to RSD 1.083 billion.

The minister pointed out that the degree of transparency of the budget had increased, as all guarantees were put “above the line,” i.e. losses made by public enterprises had been presented realistically.

Vujovic said the planned budget deficit for 2015 was RSD 158.6 billion, but if we added the guarantees of RSD 30.7 billion and other financial expenditures of about RSD 2 billion, the planned budget deficit for 2015 was 191.3 billion.

“The deficit does not have a directly comparable figure this year because financial expenditures were classified differently,” said the minister.

The expected state deficit in 2015 is RSD 232 billion, Vujovic said.

He said that budget revenues trends would change in August, when revenues would begin to grow.

The trend in the collection of major taxes, excise duties and VAT is positive and exceeds the figures achieved last year, partly due to a more agile Tax Administration, and partly since people can realize that they will no longer be able to avoid paying taxes and face no penalty, said Vujovic.

Review

Minister Dusan Vujovic said on Monday that a review of the 2014 budget is being adopted to repay debts of the Ministry of Internal Affairs, the Directorate for Agricultural Payment Operations, basic and high courts and to provide funds for severance pays.

At a parliament session discussing the government's proposal for a review of the 2014 budget and a draft budget for 2015, Vujovic underlined that he would disagree not to repay the debts, which have existed for years, now when this is possible, Vujovic underlined.

"On December 19, our spending cuts exceed RSD 70 billion and the budget review envisages repayment of debts that are outstanding for five or more years, and which could not be settled any earlier," said Vujovic and added that the budget deficit by the end of this year would be higher than RSD 190 billion.

"We will have a fantastic result and we intend to repay debts of basic and high courts amounting to RSD 2.7 billion for the services of expert witnesses and defenders ex officio, while the Directorate for Agricultural Payment Operations would discharge RSD 4.33 billion of outstanding liabilities to agricultural producers," the minister said.

Moreover, the government wants to help the Interior Ministry by covering the expenditures of Telekom RSD 700 million and Elektroprivreda Srbije RSD 457 million, Vujovic said.

Without paying these debts, we can not expect to stabilize EPS and Telekom, said the minister, adding that the government also needs to settle a debt of RSD 418 million for the payment of jubilee awards and transport of members of the Interior Ministry.

Vujovic said that the budget review also envisages RSD 500 million for severance packages, given that the number of employees interested in these social programs is greater than planned.

Nevertheless, all things considered, the spending cuts will stand at one percent as planned by the budget review, he said.

Vujovic said that the funds have been saved by the Ministry of Finance since the process of land expropriation takes more time in reality than expected.