BELGRADE: Serbia will reverse pension cuts implemented as part of an IMF programme and increase them this year and next, President Aleksandar Vucic said on Friday, underlining a big improvement in its state finances.
Serbia in February ended a three-year 1.2 billion euro ($1.4 billion) deal with the International Monetary Fund under which it cut pensions and public sector wages to reduce public debt and the budget deficit. It did not draw on any funds.
The Balkan country, which aims to join the European Union, is expected to achieve a budget surplus this year, following a small surplus in 2017, while inflation is seen at about 2 percent by year-end, giving the government greater leeway to increase spending.
Belgrade plans to scrap a 2014 law implementing the pension cuts and aims to raise them by up to 13.3 percent by the end of this year, Vucic told reporters.
"This decision was motivated by our economic performance ... Prime Minnister (Ana) Brnabic supported it, I too support this as president," he said.
Serbia is now in talks with the IMF on a new arrangement that would not involve any funding but just provide advice and monitoring.
The Balkan country's economy grew 2 percent in 2017 and is forecast to grow 3.5 percent this year. Its gross domestic product (GDP) rose 4.5 percent in the first quarter of 2018 according to a flash estimate.
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