Serbia to make budget cuts to avoid bankruptcy
BELGRADE, Serbia (AP) - Serbia's government on Tuesday announced a series of austerity measures that will cut public sector wages and hike value-added taxes to reduce public debt and avoid bankruptcy.
Finance Minister Lazar Krstic said the reform of Serbia's economy is running at least 10 years late. He said that without the measures, the state would go bust in up to two years.
Serbia is struggling with unemployment of 25 per cent. The government has foreign debt of 19 billion euros (S$32 billion) and a budget deficit of 6.5 per cent of annual gross domestic product.
Mr Krstic said the government will introduce in 2014 "solidarity taxes" ranging from 10 per cent to 25 per cent on salaries in the public sector that are above 60,000 dinars (S$885) a month. The measure will affect up to 350,000 state employees in the country of 7.3 million.