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The Government of the Republic of Serbia

In the service of citizens

Cvetkovic announces strict savings measures

Belgrade, 26 March 2009

Prime Minister Mirko Cvetkovic today announced that the government will implement severe saving measures at all levels during the global financial crisis, adding that the budget deficit for 2009 will be approximately RSD 190 billion.

Mirko Cvetkovic

At a press conference held at the government building, Cvetkovic said that the state will provide an example to its citizens, adding that there will be no employment in the public administration any more.

The Prime Minister explained that the budget deficit will have to be covered from realistic money sources and warned that the situation is very serious.

Cvetkovic also stressed that the government has a programme to alleviate the effects of the economic crisis and that agreement was reached with the IMF that the budget deficit stands at nearly RSD 90 billion, while the remaining RSD 100 billion would need to be provided from various forms of savings and fiscal adjustments.

Two-thirds of that sum, or around RSD 67 billion, will be compensated from various forms of state savings while RSD 34 billion will be generated from increased state revenues.

The Prime Minister added that savings will also be made by reducing expenses, mobile phone bills and the purchase of new cars.

Cvetkovic also said that the IMF announced it will organise a meeting in Austria with ten banks operating in Serbia, asking from them not to reduce the country’s credit activity, which would positively affect the economy and citizens.

Mladjan Dinkic

Serbian Deputy Prime Minister and Minister of Economy and Regional Development Mladjan Dinkic announced that the state administration will decrease expenses by RSD 67 billion, RSD 13 billion of which the government will save by freezing salary and pension increases and RSD 15 billion by decreasing the amount of money set aside for local self-governments.

According to him, approximately RSD 4 billion will be saved by reducing the Health Care Fund’s expenses and additional RSD 12 billion by reducing the expenses of budget users who have their own income.

Public enterprises will have to pay out their entire dividend to the state, which will add another RSD 5 billion to the budget, said Dinkic.

The Minister specified that the government is planning to increase the budget by RSD 34 billion, specifying that the non-taxable part of salaries will increase from RSD 5,980 to RSD 12,000 and the government will introduce a temporary salary and pension tax of 6%, which will lead to RSD 26 billion in revenues.

According to Dinkic, the increase in property tax and the introduction of a luxury car tax will add approximately RSD 3 billion to the state budget.