LISSOVOLIK: It is necessary to reduce budget deficit in addition to cutting spending

(Bogdan Lissovolik)

IMF Resident Representative for Serbia Bogdan Lissovolik believes that Serbian authorities have to start implementing a credible fiscal consolidation plan this year and in the medium term, as the budget deficit has to be cut by another one percent of GDP.

Lissovolik told Belgrade-based daily Blic that the control of public sector pay and pensions has to be the basis in order for public finances to be placed on a sustainable footing.

It depends on the total size of the financing gap and other measures the government is willing to take whether this should be done by freezing pensions of through some other form of adjustment in this area, he said, adding that it is completely clear that control and reduction in the number of employees in the public sector is necessary.

Lissovolik also said that raising the effective age of retirement is the key priority for Serbia, pointing out that equalizing criteria for women and men is the best practice in Europe and that this model is applied in 24 out of 27 EU countries. He added that youth unemployment should be dealth with by special measures.

Noting that public companies still dominate the Serbian economy, Lissovolik underlined that their privatization would have a positive effect on budget savings and open a possibility for growth in promising sectors such as energy and telecommunications.

When it comes to possible negotiations on a new arrangement between Serbia and the IMF, it is certain that a serious signal of commitment to a sustainable economic policy would be of paramount importance for progress, Lissovolik concluded.