IMF, govt. can't agree on 2011 budget

The main stumbling block in negotiations with the International Monetary Fund (IMF) was next year’s budget.

Izvor: B92

Sunday, 07.11.2010.

10:05

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The main stumbling block in negotiations with the International Monetary Fund (IMF) was next year’s budget. Economists believe that the problem arose due to increased demands of the government for pre-election 2011. IMF, govt. can't agree on 2011 budget Deal which the IMF and the Serbian government failed to reach will delay many things, primarily adoption of 2010 budget revision. Although it has already been prepared, the Finance Ministry says that the budget revision will be adopted after the agreement has been reached with the IMF. Unlike the trade unions, the IMF mission did not reach an agreement with the government. Disputable issue was not pensions but the state budget for 2011. Economists explain that government’s increased requests are reason for that. “Same old thing, we want to spend more than we earn. According to some earlier agreements with the IMF, which we ourselves assumed, we were supposed to reduce the consumption and now we’re giving up on it. Most likely because of the upcoming elections,” says economist Mijat Lakicevic. The IMF report points out, maybe for the first time, that the problem is inflation which will most certainly be higher than planned. The IMF has recommended a more restrictive monetary policy. “Inflation is also a great danger because it means instability. At the moment, in the short run, it suits the government because on one hand it increases income and on the other enables it to spend more and to easier deal with solvency. In a way it also suits the citizens because more money gets in, but the bill has to be paid some day and when it comes it will be higher because it will come with an interest,” Lakicevic stressed. Not even the IMF’s prolonged stay in Belgrade during sixth revision of the stand-by arrangement yielded results. Therefore, communication will continue through IMF office in Serbia. Revision of the 2010 budget and next year’s budget will not be adopted until the IMF gives green light. The government session (Beta)

IMF, govt. can't agree on 2011 budget

Deal which the IMF and the Serbian government failed to reach will delay many things, primarily adoption of 2010 budget revision.

Although it has already been prepared, the Finance Ministry says that the budget revision will be adopted after the agreement has been reached with the IMF.

Unlike the trade unions, the IMF mission did not reach an agreement with the government.

Disputable issue was not pensions but the state budget for 2011. Economists explain that government’s increased requests are reason for that.

“Same old thing, we want to spend more than we earn. According to some earlier agreements with the IMF, which we ourselves assumed, we were supposed to reduce the consumption and now we’re giving up on it. Most likely because of the upcoming elections,” says economist Mijat Lakićević.

The IMF report points out, maybe for the first time, that the problem is inflation which will most certainly be higher than planned. The IMF has recommended a more restrictive monetary policy.

“Inflation is also a great danger because it means instability. At the moment, in the short run, it suits the government because on one hand it increases income and on the other enables it to spend more and to easier deal with solvency. In a way it also suits the citizens because more money gets in, but the bill has to be paid some day and when it comes it will be higher because it will come with an interest,” Lakićević stressed.

Not even the IMF’s prolonged stay in Belgrade during sixth revision of the stand-by arrangement yielded results. Therefore, communication will continue through IMF office in Serbia. Revision of the 2010 budget and next year’s budget will not be adopted until the IMF gives green light.

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