Serbia to increase public sector wages, pensions this year and next

BELGRADE, Oct 29 (Reuters) - The Serbian government is ready to raise wages in the public sector this year and pensions in 2019, on the back of favourable fiscal revenues and in line with a non-financial arrangement with the International Monetary Fund, Finance Minister Sinisa Mali said on Tuesday.

The government of the Balkan country this month moved from a small surplus to a deficit of 0.5% of GDP, to allow for additional capital spending and an increase of public sector wages and pensions.

In an interview with Belgrade’s private O2 TV, Mali said that public sector wages would rise between eight and 15%, starting in December. Serbia’s average wage is 54,115 dinars ($511.17).

“Nurses will receive a raise of 15%, followed by doctors with 10%, while employees in the state administration will receive a raise of 8%,” Mali said.

Pensions would increase 5.4%, starting in January, while retirees would receive a one-off payment of 5,000 dinars in December. An average pension in Serbia stands at around 26,000 dinars.

Earlier this month, the IMF said that a wage increase for public sector workers was justified, but warned that the overall wage bill is growing faster than nominal GDP for a second year in a row.

Serbia’s economy is set to grow 3.5% in 2019 and 4% in 2020, both the IMF and central bank said. In the second quarter of 2019, the economy grew 2.9% and Mali said that growth may reach 3.7% for the whole year.

Belgrade and IMF have agreed that the spending plan for the next year would target an overall fiscal deficit of 0.5% of GDP, unchanged from this year.

Mali said that the government of Prime Minister Ana Brnabic’s would discuss 2020 budget on Nov 2.

As the ruling coalition led by the Serbian Progressive Party of President Aleksandar Vucic enjoys a comfortable majority in the 250-seat parliament, the vote on draft budget, tentatively set for mid-November is seen as a formality. ($1 = 105.6400 Serbian dinars) (Reporting by Aleksandar Vasovic; Editing by Chizu Nomiyama)