Serbia Cuts Jobs For IMF Loan
Serbia may have to cut one-fifth of the 70,000 employed in the public sector to satisfy the terms of an International Monetary Fund (IMF) loan.
Serbia's Finance Minister Diana Dragutinovic said it was planning more cuts before talks with the IMF resumed next month.
The IMF postponed releasing the second tranche of its three billion euros loan as it awaited more reform.
With unemployment high in Serbia, unions are already threatening strikes. The Serbian economy has been hit hard by the global downturn and is expected to contract by more than five per cent this year.
Currently, the unemployment rate stands at 18 per cent. The 800million-euro instalment is dependent on the government making reforms to comply with IMF conditions set out when the original loan was agreed in March.
The IMF has suggested raising the value-added tax, which is already 18 per cent, to reduce its budget deficit.
But Serbia wants to achieve this through staff cuts.
'The government will present its strategy to the IMF mission without VAT or tax increases... but with a strategic plan of downsizing public costs through a decrease of the public administration,' said Serbian Environment Minister Oliver Dulic.
Currently, Serbia is running a deficit of 4.5 per cent of gross domestic product.
Serbia has proposed four per cent, while Ms Dragutinovic said the IMF wanted it to be about 3.5 per cent.
'I expect from the ministries to give their proposals by September 18 for rationalising and reducing public spending,' Ms Dragutinovic said.
— BBC