Deficit increase as temporary solution


The IMF’s approval for increasing the budget deficit, which the government is hopeful of, is only a short-term solution for the economy. The government is ready to ask the International Monetary Fund to allow an increase budget deficit, but it is well aware that it will have to offer something in return.

For now, this appears to be making employees of the public sector redundant, which many of he parties are against because they fear losing voters. 

The government confirmed for the newspaper that all ministries have received orders from the prime minister to prepare a draft for a platform of negotiation with the IMF and an accompanying package of measures.

The most interesting sectors for reducing costs are the state administration, education, health, culture and sport. But even in education, where the minister admits there are too many employees, the word “redundancies” cannot be mentioned because of the political consequences it may have.

No one wants to let people go in their sector, because that decreases the number of voters—Blic’s source close to the government said.

Another source explained that the government is trying to find a solution of how to cover regular expenditures with a permanent decrease in public income.

This calls for a serious rationalization, from education through health, to the public companies and state administration.

Increasing VATs would solve the problem in the short-term, but Serbia would be less competitive, Blic’s source explained.

Health Minister Tomica Milosavljević said that there are no unneeded employees in this sector, which is also shown by an analysis done by foreign consultants. According to this report, he said that “some 15,000 workers left the health sector in 2006”.

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