Monday, June 10, 2013

Brefort: Serbia will not face Greek scenario

6/10/2013 12:24:00 PM

  BELGRADE - Serbia is not going to face a Greek crisis scenario, but it cannot survive with such a high budget deficit and constant borrowing, Loup Brefort, World Bank's (WB) country manager for Serbia, has said. In an interview for the latest issue of Svedok, a Belgrade-based weekly, Brefort said that the Serbian government needs to reduce the country's budget deficit by at least 1.5 percent of the gross domestic product (GDP), noting that the necessary measures should be taken as soon as possible as adopting them in September and October might already be too late. Bearing in mind that the public sector wages and pensions account for 52 percent of the budget expenditures, I do not see how the government can reduce the deficit if nothing is done in terms of salaries and pensions, said Brefort. It is up to the government to decide what it wants, he added. 

 Many employees in Serbia left work early and were given the full pension scheme, which is something that no system in the world can withstand, said the WB official. Serbia has an aging population and this must be taken into account, Brefort said, noting that at the time of the former Yugoslavia, the ratio of employed to retired persons was three to one, while now Serbia has one employee per 1.7 beneficiaries. A possible way to solve this problem is either an increase in years of work, or reforming and rationalizing the pension system, said Brefort. Brefort admitted that part of the economic plight that Serbia faces right now stems from the crisis in other European countries whose trade with Serbia makes up 70 percent of Serbia' total trade volume and where as much investment comes from. Brefort lauded the actions, which included a fiscal consolidation, that the Serbian government took in September and October last year, noting that there are strong ties of lobbyists and bureaucrats in Serbia who oppose reforms not wishing a change in the current economic system. Photo Tanjug/M. Jelesijevic

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