A delegation from the International Monetary Fund, IMF, is set to arrive in Belgrade today to hold talks with the Serbian government on the fourth review of the country’s stand-by arrangement.
In an interview with daily Politika on Tuesday, the IMF’s representative in Serbia, Bogdan Lissovolik, said that agreement on the increasing of average wages and pensions in the public sector will be the main topic of the forthcoming talks in Belgrade, as this wasn’t agreed upon during the talks between IMF and Serbian officials in Washington.
Lissovolik noted three problems that have to be solved.
“First, can the growth rate of average public wages in the public sector and pensions be equal in the next few years, as recommended by the Serbian government? Second, will Serbia be able to afford such an increase? And third, how can Serbian authorities implement the possible increase without creating additional costs in the state treasury?” the daily quoted him as saying.
He went on to say that the law on fiscal responsibility and the proposed tax reforms will also be discussed.
With the standby agreement, which the IMF granted on May 15, 2009, Serbia approved a loan of €2.87 billion for the strengthening of its foreign currency reserves. This April, the IMF delegation allowed €180 million of its loan to Serbia to be disbursed.
Serbia agreed to reduce expenditures for wage payments, i.e. to freeze incomes and pensions in 2010 and also to dismiss redundant employees in the public administration, and to adopt a new law on pension and disability insurance.
According to the law on determining the maximum number of employees in the state administration, Serbia should be required to lay off 3,400 state employees this year.
Late last year, Serbian PM Mirko Cvetkovic set a deadline by which cuts to the public sector should be completed in order to achieve savings.
“What our calculations show is that the average severance pay covers up to eight wages. This means that lay offs after April would cause additional costs to the budget. Therefore, what I can say is that the process should probably be completed by March,” Cvetkovic said at the time.
The country’s government, however, has remained silent about the number of public sector employees that have been laid off.
According to Beta news agency, the plenary meeting of the government and representatives of the Serbian Central Bank with IMF representatives is scheduled to take place on May 17, while the mission is supposed to complete its two-week revision of the standby loan arrangement with Serbia on May 25.