Serbia to Cap Managers’ Wages, Merge Agencies to Cut Budget Gap

Serbia will limit wages of managers in state-run companies, streamline dozens of government agencies and tighten control over their spending, even for institutions that have their own source of income.

The measures are part of a “fiscal consolidation” that will include a supplementary budget for 2012 set for adoption by Sept. 15, Deputy Finance Minister Vlajko Senic told reporters in Belgrade today. There won’t be immediate job cuts in the administration while a review of all agencies is conducted to determine which will be merged with ministries to reduce costs, he said.

“All the revenue will be centralized” under the Finance Ministry, even for government bodies that are partly funded by charging for services, Senic said.

Serbia is trying to reduce a budget gap that reached 7.2 percent of gross domestic product at the end of June, even as the economy fell into recession in the first half. A $1.3 billion loan program with the International Monetary Fund was suspended in February over failure to meet fiscal targets.

The government also plans to increase value-added tax while lifting more than a hundred levies to help small- and medium- sized businesses, Senic said.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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