Serbia will revise spending to limit the budget deficit to 4.7 percent of economic output this year as part of a broader program to balance austerity and growth, the Finance Ministry said.
Spending will be cut by 40 billion dinars ($464 million), mostly by reducing administration, while public wages and pensions won’t be lowered, the government said in an e-mailed statement, citing Finance Minister Mladjan Dinkic. It said members of the ruling coalition agreed on measures at a Cabinet meeting in Belgrade today.
“Serbia needs faster economic growth than the 2 to 3 percent that we’re going to have this year,” Dinkic was quoted as saying. “We have to reduce the bureaucracy so those who invest and don’t need state help, can invest their money more easily.”
Serbia seeks to narrow the gap after the International Monetary Fund warned last month it may reach 8 percent of GDP this year. Standard & Poor’s said the country may face a downgrade without spending cuts.
Details of the program, seen as a “balance between austerity in the public sector and stimulating development and economy in the private sector,” will be defined on June 16, followed by implementation in autumn, according to the statement. Changes will include easier issuing of construction permits and a more flexible labor law, it said.