Public enterprises sinking Serbia's public finance

BELGRADE - Public enterprises are sinking Serbia's public finance and unless the solution to this problem is sought simultaneously with fiscal consolidation and salary and pension cuts, it would turn out to be a pointless sacrifice, economic expert Vladimir Vuckovic warned on Tuesday.

Public enterprises cause around EUR 1 billion of expenses to tax payers annually and this is why they constitute the groundwater for Serbian public finance, he said.

"The government announced that it would reduce the expenses for public sector salaries and pensions and this was necessary from the economic standpoint. Nevertheless, to prevent this sacrifice from ending up pointless, it is critical to prevent outflow of funds elsewhere, i.e. through public enterprises," Vuckovic told Tanjug after the presentation of the latest edition of the economic bulletin Macroeconomic Analyses and Trends (MAT).

Vuckovic, who also holds a chair in the Fiscal Council, noted that the problem is not easy to solve because the solution does not boil down to management professionalisation only, as another difficulties lie in the fact that product prices in public enterprises are being controlled for years, infrastructure is in poor shape, and products need to be delivered to non-payers in the government sector.

"In order to change the situation, market prices must be ensured for their products, management modes need to be changed and the practice of paying the bills for delivered goods has to be introduced," he said and added that public enterprises also need to solve the issue of surplus employees.

Asked about the deadlines for the completion of changes by the government, Vuckovic said that the search for solution to some problems can be completed...