(Update with details of Reuters chatroom comments)
By Aleksandar Vasovic
VIENNA/BELGRADE Jan 14 Serbia needs to reform
its bloated public sector and pass changes to key laws to secure
growth in the future, Economy Minister Sasa Radulovic said on
Tuesday, adding that failure to do so could lead to early
Radulovic told the Reuters Global Markets Forum, an internet
chatroom, in Vienna that changes to laws on labour,
privatisation and bankruptcy were key for the country, which is
trying to kick start economy.
"If the laws are not passed that means the political parties
gave up on reforms and that it's better to have elections as
soon as possible," Radulovic said.
The laws are important for government plans to close or sell
as many as 179 loss-making state forms that are part of a
restructuring programme. Ending state subsidies to these firms
will also help Serbia to complete fiscal consolidation plans.
"Without political will for reforms we don't have much to
look forward to as far as the economy is concerned," Radulovic
told the forum on the sidelines of the Euromoney and East
Serbia's 2014 budget targets a shortfall of 4.6 percent of
national output, only slightly down from the 2013 forecast of
But spending by municipalities, subsidies and sovereign
guarantees for loss-making state companies could push the
consolidated deficit to 7.1 percent of GDP.
The government has targeted a 2 percent growth for 2013 and
wants to eke out 1 percent growth this year. To cut
expenditures, the government has also pledged to trim wages in
the public sector that employs about 740,000 people or about 10
percent of population.
Some analysts have said the 2014 budget ducks the toughest
spending cuts the government pledged in September, fuelling
speculation that the Serbian Progressive Party (SNS), the
biggest party in the coalition, has an eye on early elections.
Radulovic has repeatedly warned Serbia should sell or
declare bankrupt hundreds of loss-making state firms that have
been enjoying hefty state subsidies .
The reforms would lead to unpopular job losses in the public
sector, which employs 740,000 people or about 10 percent of
Radulovic said the government has set aside 20 billion
dinars ($236.6 million) to help redundant workers to cope with
Serbia, which is expecting to start the accession talks with
the European Union this month, also wants a precautionary loan
deal with the International Monetary Fund, crucial for assuring
The talks with the lender, which froze its previous 1
billion euro ($1.37 billion) loan deal with Belgrade in 2012,
are expected to start in February or March.
On Monday, Aasim Husain, deputy director of the IMF's
European department, said Serbia had made strides in controlling
it 2014 budget but needed to do more to ensure fiscal stability
in 2015 and 2016.
Radulovic said reforms are more important: "It's not what
the IMF is calling for, it's what the credible plan is to get
the deficit in check and at the same time to achieve growth."
To boost growth, Serbia sought loans and investments
including the United Arab Emirates, China and Russia, but the
pace of these deals has been slow.
Radulovic said that nothing could replace reforms: "We are
talking too many investors and it ain't done until its done."
($1 = 0.7324 euros)
(Reporting by Aleksandar Vasovic; Additional reporting Ivana
Sekularac Editing by Jeremy Gaunt)