End of Serbia and IMF negotiations

Belgrade May 31. 2010. (Serbia Today) - Serbian Prime Minister Mirko Cvetkovic said that the government reached an agreement with the Mission of International Monetary Fund (IMF) in the fourth stage of negotiations about their loan, which is worth 2,9 billion EUR. Serbian Prime Minister did not specify details of the agreement, but he announced that it will be released soon. Reporting about negotiations Belgrade daily Blic announced that Serbia will keep public sector salaries and pensions frozen at the same level this year. Instead of giving those paid from the state budget a raise, the government will make two bonus payments worth RSD 5,000 (some EUR 50) each, in October, and again in December, according to the article. The newspaper writes that this will be the likely outcome of the ongoing negotiations held between Serbian government officials and a visiting IMF delegation. Serbia has a stand-by arrangement worth a total of EUR 2.9bn with this international financial organization. When the IMF and the Serbian government negotiate the next revision of the deal in August, the issue of public sector salaries and pensions will be revisited, writes the daily. Tax system reforms have only been mentioned in passing this time, the article claims, while the subject will be revisited in the summer. This means that there will be no change to the VAT level – “at least not until next year. ”According to the newspaper however, it remains to be seen whether the RSD 5,000 bonuses will be distributed to all public sector employees, or only those with lowest income.