Thursday, October 10, 2013

First effect of measures will be lower fiscal deficit

10/9/2013 12:19:00 PM

BELGRADE - Serbia's Minister of Finance Lazar Krstic said on Tuesday the first effect of the austerity measures will be the reduction of the fiscal deficit next year. Laws containing the measures have yet to be adopted, followed by the hardest part, their implementation, he noted. Several positive effects of the measures will be felt in 2014, and the first will be the reduction of the fiscal deficit, he told Radio and Television of Serbia. 

 The reduction of the budget deficit is crucial, and it is accompanied by another goal, perhaps the most important one, which is economic recovery, especially the recovery of the private sector, he stated. An increase in employment in the private sector and later an increase in profit will come once the labour law is changed, the procedure required to get construction licences is simplified and other administrative obstacles to business are removed, he remarked.

 Commenting on the reduction of pays exceeding RSD 60,000 in the public sector, which is part of the austerity measures, Krstic said the government had tried to be fair. The decision to reduce salaries higher than RSD 60,000 was made after calculating its effect on the budget and that standard of living, he stated, adding that the calculations showed that 180,000-200,000 people would be affected by the decision. 

 The government had no choice when it decided to raise the lower VAT from 8 to 10 percent, since tax revenue is low, he pointed out. Krstic hopes the higher VAT will not make things worse for the poorest and that the retail will absorb the effect of the increase by lowering its markups, which was the experience in other countries. He pointed to the importance of reorganizing the government sector. The minister said that standardized pay scaling would be introduced for government employees, so people who work at similar jobs would be paid similar amounts. 

 Krstic believes that the economy will resist any political influences during the implementation of the economic consolidation measures, which the government presented on Tuesday. "I will remain consistent in the implementation of the measures, and the government used its public meeting to send a clear message that it understands what needs to be done and that it is ready to take on the responsibility," he remarked. The government held a public meeting, covered live by Radio and Television of Serbia, to present its austerity measures and announce further reforms in the economy and the public sector. Photo Tanjug/Z. Zestic

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