The measures to be undertaken by the new government over the next six months will be crucial and it is therefore important to reach general consensus. This is the conclusion of participants of the conference entitled Serbia’s Economic Priorities, organized by the Serbian Chamber of Commerce and Belgrade weekly NIN. Participants included representatives of local and international financial institutions, businesses, and political parties. Biljana Blanusa has more.
Over the first six months, the new government must undertake measures to stop the further decline of economic activities and to resolve the budget deficit financing, underlined President of the Serbian Chamber of Commerce Milos Bugarin. According to him, the major problem is also the increase in the country’s overall foreign debt that has reached the amount of some 24 billion euros. The Chamber has drafted the economic policy for the next four years and is ready to offer it to the new government to contribute to the accelerated resolution of the crisis. The most important measures include reforms of the public sector and the tax policy, as well as a change of the labor legislation, which would generate room to increase the employment rate. High fiscal and parafiscal taxes, as well as more and more expensive price of indebtness additional burden the economy.
World Bank's Country Manager for Serbia Loup Brefort assessed that the new government must improve business environment in order to increase investments, economic growth and employment rate. Brefort underlined that Serbia is not threatened by a catastrophic scenario, but the coming 12-18 months will be difficult. In addition to budget deficit issue, Brefort stated that one of priorities is the reform of the public sector, primarily public enterprises that, as he said, belong to citizens, not to political parties.
PM Mirko Cvetkovic underlined that the budget deficit has increased due to decline in economic activities, which resulted in a decreased inflow of income in the state treasury, and not due to increased spending. He emphasized that out of 875 billion dinars, 49% of the amount was spent in the first 6 months of the year, so the spending has not increased. Cvetkovic said that, according to assessments, the „hole“ in the budget is estimated to be some 35 billion dinars, and that now is the right moment in time to start considering options as to how this will be covered. Therefore, an important question in the e economic program of the future Government whether the government will be savings or spending oriented, or it will possibly also choose a combination of the two strategies. The government could receive significant assistance in reaching this decision through an arrangement with the IMF, said Cvetkovic, who supported continuation of the cooperation with the IMF.
While representatives of the political parties presented their economic programs, handling Serbia’s issues in different manners, a member of the Fiscal Council, Vladimir Vuckovic, emphasized that the program of measures proposed by this institution is still the best solution to the current situation. He believes that savings can be made by decreasing state agencies, subsidies, and in the course of public procurement, but that is not enough. The short-term saving could be made by freezing public sector wages and pensions, and the increased VAT which would be enabled by greater inflow of the funds in the state treasury. However, Vuckovic said that this would be sufficient just at the moment, but in the long run, it is necessary to carry out an essential reform of the economic system.