BELGRADE: Serbia is discussing with the International Monetary Fund cutting the work force in the state administration by five percent, a minister was quoted as saying on Tuesday, as the Balkan country pursues a new loan deal.
It follows the announcement last week by Prime Minister Aleksandar Vucic of pension and public sector wage cuts in an effort to curtail a budget deficit forecast at 8.3 percent of national output.
Serbia is expected to start full loan negotiations with the IMF after the government revises the 2014 budget later in September or early October.
"We are in talks with the IMF about cutting the number of employees in public sector by five percent," Kori Udovicki, minister for state administration and local self management, was quoted as telling the Serbian daily Blic.
"We hope to be able to meet this demand to the largest degree as workers retire, but there are concerns that we will have to lay off 25,000 people."
The IMF did not immediately respond to a written request from Reuters for confirmation.
Udovicki specified that she was referring to the state administration, which includes doctors and teachers. The state administration numbers around 500,000 people, in a country of 7.3 million. Another 200,000 are employed in a host of indebted state-owned companies, which together with the state administration makes up the public sector.
Vucic's government wants a three-year precautionary loan deal with the IMF, a safety net that is crucial to reassuring investors worried over the size of the budget deficit and a public debt pile now seen hitting 73 percent of gross domestic product (GDP).
Analysts say Serbia may need to cut its public sector workforce by more than 100,000 people to put its finances on a stable footing. Unemployment already stands at 20 percent.
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