Serbia finance minister resigns over slow pace of reforms

AFP
A man stands behind the Serbian national flag Mitrovica on the evening of April 19, 2013
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A man stands behind the Serbian national flag Mitrovica on the evening of April 19, 2013 (AFP Photo/Sasa Djordjevic)

Belgrade (AFP) - Serbia's finance minister stepped down on Saturday after just two months in the job, citing a disagreement with Prime Minister Aleksandar Vucic over the pace of economic reforms.

Lazar Krstic had planned to introduce austerity measures to revive the country's ailing economy, notably by cutting pensions by 20 to 25 percent and reducing public sector wages by 20 percent.

"I believe that those measures should have been applied immediately. The prime minister has another view regarding the pace of those reforms and that's why we have agreed ... that I will resign," Krstic told reporters.

Vucic, also present at the press conference, thanked Krstic for his efforts and confirmed his reasons for leaving.

"Krstic is right, but at this moment I'm not ready to allow implementation of certain measures, notably decrease of pensions," he said.

Serbia is expected to post a record budget deficit of 8.0 percent this year, with growth forecast to reach 1.0 percent. But output could yet worsen by another 0.2 percentage points owing to devastating floods that struck in May.

Serbia's budget, equal to about 8.0 billion euros ($10.87 billion), is struggling to cope, as it has to fund payments to 1.7 million pensioners and more than 700,000 public sector workers in a country of 7.2 million people.

More than 20 percent of the workforce is unemployed, and many of those with jobs barely survive on an average monthly salary equivalent to 350 euros ($475).

Earlier Saturday, before Krstic announced his resignation, the Fitch ratings agency affirmed Serbia's long-term foreign and local currency ratings at "B+" with a stable outlook.

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