IMF representative urges Serbia to keep wages and pensions frozen

09:42, January 26, 2010      

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The International Monetary Fund (IMF) Resident Representative to Serbia Bogdan Lissovolik urged Serbian government to keep wages and pensions frozen in 2010, Serbian daily Vecernje Novosti reported on Monday.

Lissovolik said that he did not negotiate with the Serbian government about the request of unions to increase salaries in the public sector, but he reminded that the current stand-by loan arrangement between Serbia and IMF envisages that pensions and salaries in the public sector remain frozen in 2010.

The Serbian government agreed to start an overhaul of the country's pension system and public administration and to freeze pensions and wages in 2010 to allow for the disbursement of the third tranche of the 3 billion-euro stand-by loan, signed with the IMF in March last year.

If the salaries and pensions were unfrozen, the deficit would raise from the planned four to six percent of the GDP, that would be too high a deficit, which would carry the risk of destabilizing the Serbian economy, Lissovolik said in an interview.

He pointed out that more effort should be put in order to actually carry out reforms in firms which are the property of state. Some of the enterprises should be prepared for a fully or partial privatization. The sector of public companies in Serbia is still too large and its restructuring would give more chance for the development of the private sector.

Source: Xinhua
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