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Finance Minister pledges restrictive budgetary policy to preserve macrofinancial stability
Belgrade,
20 July 2004
Serbian Minister of Finance Mladjan Dinkic said today that the government is pursuing a tight budgetary policy, adding that tax collection has increased by 20 percent.
The budget deficit has been significantly reduced against 2003, Dinkic told a press conference, adding that this year’s budget gap has been projected at 2.5 percent of GDP, compared with 3.9 percent in 2003.
Noting that the January-June inflation rate has exceeded the planned figures, the Minister called for a more restrictive monetary policy in the second half of the year.
Faced with a lack of privatisation revenues, the government will continue to pursue a restrictive budgetary policy, said Dinkic, adding that the monetary and fiscal policies must be coordinated in a way that ensures a single-digit annual inflation rate and macrofinancial stability. In order not to exceed the projected budget deficit, the state must cut public spending in the second half of the year, he explained.
The state will not allow for further salary increases in the public sector, said Dinkic. Any salary hike above the planned 8.5 percent this year would put pressure on inflation, the central bank’s hard currency reserves, and the national currency, he explained.
Dinkic invited all workers planning industrial action to meet with officials of the Ministry, noting that the state has no funds for wage increases. Salary hikes can be discussed only what the country strengthens the economy, he stressed, adding that Serbia must speed up its privatisation and restructuring efforts to secure a sustainable economic growth.
Noting that the January-June inflation rate has exceeded the planned figures, the Minister called for a more restrictive monetary policy in the second half of the year.
Faced with a lack of privatisation revenues, the government will continue to pursue a restrictive budgetary policy, said Dinkic, adding that the monetary and fiscal policies must be coordinated in a way that ensures a single-digit annual inflation rate and macrofinancial stability. In order not to exceed the projected budget deficit, the state must cut public spending in the second half of the year, he explained.
The state will not allow for further salary increases in the public sector, said Dinkic. Any salary hike above the planned 8.5 percent this year would put pressure on inflation, the central bank’s hard currency reserves, and the national currency, he explained.
Dinkic invited all workers planning industrial action to meet with officials of the Ministry, noting that the state has no funds for wage increases. Salary hikes can be discussed only what the country strengthens the economy, he stressed, adding that Serbia must speed up its privatisation and restructuring efforts to secure a sustainable economic growth.
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