In an interview with Novi Magazin, Stamenkovic predicts a reduction in the number of employees in 2012, and probably in 2013. Even under the best of circumstances, we cannot expect the growth in the employment rate until 2014, but the quoted number of 400,000 new jobs by 2020. will be reduced by more than half. Stamenkovic says that new Serbian government must increase the VAT after the elections.
What are the consequences of the fact that the IMF did not accept the Serbian budget for year 2012, that is, did not approve the first revision of the Agreement?
Certainly, this is not good. Serbian rating does not have to decrease immediately, but investors will definitely pay attention to this signal as it denotes increased risk and they will become more cautious, since increased risk means more debts.
On the other hand, another problem might occur when data analysis shows that this year’s revenues do not go as planned, which automatically means an increase in fiscal deficit and public debt. Opening of this issue also opens a new problem in the implementation of the Arrangement with the IMF.
How do you now the future of Serbia now? You made a couple of scenarios of the Development Strategy until 2020. How does it all appear now?
The situation is much worse now. To recall, according to the optimistic scenario, we anticipated a six per cent growth rate in this decade, that is between 2011-2020. Now we should be satisfied if we manage to reach four per cent, but only under the assumption that the crisis in the euro zone will pass this year.
However the rate of four percent provides very little scope for employment. It means that, according to the current situation, we will have a reduction in the number of employees in 2012. and probably in 2013. Under the best of circumstances, we cannot expect the growth in the employment rate until 2014, but the quoted number of 400,000 new jobs by 2020. will be reduced by more than half.
On the other hand, we must not forget that there is also a black scenario. If the budget deficit gets out of control and we get into a serious problem in paying off the external debt, it will at some point lead to a drastic fall of RSD. And devaluation means inflation. And we will have to undertake rigorous stabilization measures which involve several years of stagnation.
But, even if we avoid the “black scenario”, will be able to rely on larger growth rates of five percent only in the second half of this decade.
What should be the actions of new government? The usual answer is – reform, but do you have any specific suggestions?
My grandson, who is ten, has recently said: the only reform that is successfully implemented in Serbia is so-called “reform cake”. So, even the children see to what degree are reforms avoided here. In my opinion, the first thing the new government should do is to make the revised budget and to bring it within realistic frameworks. I know that what I am about to say is very unpopular, but among other things, this means that we must increase the budget revenue, that is – the VAT has to be increased by any means necessary.
Secondly, shadow economy has to be suspended. Do not ask me how, that is something the state should know. On the other hand, corruption has to be terminated. Non-payment of taxes is closely linked with corruption.
Our public administration is absolutely incompetent and incapable. Therefore, we need the reform of public administration. To say roughly, I think that the number of officials in public administration should be reduced to one third, but with doubled salaries. Since civil service salaries are now low, 150 agencies have been created so that salaries in these agencies may be increased and everyone can employee their own people. More than half of these agencies, perhaps four-fifths, have no purpose. The main step in increasing the efficiency of state administration is cost cutting, but the other one is termination of agencies.