Watchdog Queries Serbian PM's Pension Pledge

Aleksandar Vucic, Serbian Prime Minister, on Thursday said Serbia's austerity measure are bringing sufficiently good results for pensions and salaries in the public sector - reduced by 10 per cent in November - to rise this October.

"In August, we will start talks with the IMF about salaries and pensions increases, and we will increase them," Vucic said on Thursday.

In first four months of 2015, Serbia collected ?420 million more than was planned, he said, while in April the country could even see a budget surplus.

"We expect Serbia to record GDP growth of 1 per cent in 2015, despite austerity measures. That is almost a small miracle," Vucic said, adding that the state would start spending more as a result on employment and infrastructural investment, such as the railways and airports.

Vucic's based his optimistic pledges on the fact that the budget deficit stood at ?179.2 million at the end of the first quarter of 2015, less than half the ?458m shortfall originally predicted.

However, the Fiscal Council, a state-run but independent watchdog institution, has disputed the PM's idea that pension rises are practical.

Pavle Petrovic, president of the Fiscal Council, told the weekly Novi Magazin on Thursday that there was no room for pensions and salaries increase before 2017 at the earliest.

"Salaries and pensions were cut, but only now have we set out a platform to deal with the hardest issue - public companies and the public sector in general," Petrovic said, adding that economic reforms are just starting.

Petrovic said the deficit was lower as a result of better tax collection, but warned that it could go back up, as key measures that the government should have taken are yet to be implemented.

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