Serbia near-bankrupt, Ukraine unsustainable

World

Serbia is close to insolvency and must cut public wages and subsidies to state companies to avert it, Deputy Prime Minister Aleksandar Vučić stated on Sunday, with the national government having been slated to yesterday introduce measures designed to squeeze the deficit and shrink public debt without affecting pensions, a crucial demand of the junior ruling Pensions Party, Vučić told broadcaster Prva TV in an interview Sunday. 

“We are virtually on the verge of bankruptcy,” Vučić said. “Measures for economic recovery will be tough[,] not populist and will affect between 300,000 and 500,000 public-sector workers,” he said, adding that the savings will amount to “between €200 million and 230 million.” 

At 10am CET today in Belgrade, Prime Minister Ivica Dačić is scheduled to lead an open government meeting to discuss the new measures; Serbia’s Finance Minister Lazar Krstić had stated last week that the government “plans to save €1.6 billion over three years to rein in public debt.”

Serbia’s fiscal deficit is expected to reach 8.3% of gross domestic product this year, according to the International Monetary Fund.

Ukraine macroeconomic imbalances “unsustainable”

Ukraine must act quickly to correct imbalances in its economy, which threaten to widen the budget and current-account deficits beyond the government’s control, Quimiao Fan, the World Bank’s director for Belarus, Moldova and Ukraine, told reporters in Kiev yesterday.

Ukraine should allow a more flexible currency exchange rate and give up gas-price subsidies to qualify for international bailout funds, he added.

The Washington-based lender cut its estimate for the country’s 2013 economic growth to zero from 1%.

Ukraine is struggling with an economic contraction, a widening current-account gap, shrinking foreign reserves and trade restrictions from Russia, its biggest export market. Delaying an economic overhaul beyond presidential elections in 2015 would only make the changes more painful and the recovery more protracted, Fan said.

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