Serbian Council Warns of Debt Crisis


Source: Beta, B92/Belgrade

May 24, 2013

The Fiscal Council said that the government in Belgrade needs to take urgent measures to tackle a potential debt crisis.

The Council warned that Serbia “is back in a dangerous position thanks to insufficient reduction of the deficit in 2013 and postponement of reforms, when a public debt crisis is possible”.

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

Serbia also needed a credible plan to reduce the deficit in the medium term, the Council added.

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.

The Financial Council said the Finance Ministry’s austerity program will reduce the deficit by 0.6 to 0.7 per cent of GDP, instead of a planned 1 per cent.

“Control of wages and pensions will be necessary for the 2014 budget as well and structural reforms need to begin immediately,” the Council said, adding that any increase in wages and pensions in October would be “fiscally irresponsible”.

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