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news 21 Jun 13

Serbia Introduces Fresh Austerity Measures

The government has adopted a package of special austerity measures aimed at cutting the number of staff in the public sector and reducing spending.

Beta, Tanjug
Belgrade

The government announced on Thursday that it would introduce new austerity measures in the public sector and reduce the number of civil servants.

The government intends to "stimulate the growth of the private sector and streamline public companies," it announced.

Ministries are tasked with saving around 32.1 billion dinars (about 270 million euro) in total. The Finance Ministry will be most affected as it will have to save around 6 billion dinars (about 52 million euro).

The government also announced that it will streamline public companies, reducing direct and indirect subsidies and imposing stricter controls on financial guarantees.

Mladjan Dinkic, the Finance Minister, said the total number of staff in the public sector will be recorded by the end of September.

He said the government would impose strict controls of salaries and the workforce by introducing a single register of all employees.

By the end of September, analysis will be completed concerning the necessary number of workers in the public sector and public companies.

As of January 1, the government will launch a centralized mechanism for salaries at national level, Dinkic said, based on a model implemented in Croatia.

Last month, Serbia's Fiscal Council said the government needed to take urgent measures to tackle a potential debt crisis.

It warned that Serbia was “back in a dangerous position, thanks to insufficient reduction of the deficit in 2013 and the postponement of reforms”.

The Council predicted that national debt, which is already above 60 per cent of GDP, will continue to grow in 2013 and 2014.

This year, the fiscal deficit will exceed 5.5 per cent, instead of the planned deficit of 3.6 per cent of GDP, even if special measures for reducing the deficit are taken, the Council said.

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