Cvetkovic explained it turned out that the 3% GDP deficit which the government determined by budget revision is very low compared to other states, which is why the demand to increase the deficit is a good basis for talks with the IMF, as that is one way to increase spending and mitigate the effects of the crisis.
He recalled that the April budget revision marked the greatest reduction of budget spending in Serbia, stressing that it is uncertain whether it can be further adjusted.
Asked whether Serbia could be left without the second tranche of the IMF loan if it fails to honour the agreement, the Prime Minister said that Serbia is trying to fulfil its obligations under strained circumstances, adding that if any problems arise, it is ready to talk about ways to overcome them.
Cvetkovic however emphasised that it is not so important how fast the funds from the IMF arrive, but how Serbia will implement fiscal policy and restrain public spending.
He recalled the budget revenues achieved so far, adding that regular revenues from customs and taxes are as expected, though the budget has 40% less revenue from state institutions.
If these instruments were applied, there would have been almost no deficit, noted the Prime Minister stressing that the government’s goal is not to transfer funds to the budget and thus jeopardise someone’s liquidity.
Cvetkovic said that the first analyses of the effects of government measures so far show that it chose the right path, recalling that thanks to government subsidies for interest rates, businesspeople can get more favourable loans.
Government measures are well-designed, but the construction sector must be more aggressively encouraged since it is aversely affected by the crisis, he noted.
The Prime Minister added that the measures helped a number of companies to overcome the worst moments in the crisis and continue operating, affirming that the government will react whenever it is necessary to maintain economic activities.
However, bankruptcy is also a sort of a cure. Perhaps in some cases it is better for a company to go bankrupt and start all over again with a new owner, thus helping to stop a chain reaction and weakening of other companies, Cvetkovic explained.
Asked whether retail chains are one of the key generators of non-liquidity, he said that retailers owe RSD 6 billion to suppliers, but added they reached had agreement on that at a recent meeting .
Retailers promised to settle their obligations before the end of June, the Prime Minister said, stressing that the government will wait to see whether they will hold to their promise. If they do not, the problem will have to be solved otherwise, he added.
Cvetkovic stressed that the government will do all it can to maintain the stability of the country, adding that he does not expect radical workers’ protests in autumn or an outburst of civil discontent.
I believe we are managing to survive the crisis with the least pressure on the poorest. It would not be good for the state if it comes to an outburst of protest because it does not create new values, nor can you earn your salary that way, concluded the Prime Minister.