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Serbia Sees July as Cut-Off Date for Faster Budget Payments

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The Serbian government may eliminate delays as of July 1 in paying state contractors and other businesses from the budget while rescheduling its previous obligations.

Long accused of being the biggest debtor in the country and source of a chronic lack of liquidity in the public and the private sectors, the state aims to “discipline itself” by reducing the payment deadlines to 60 days as of July 1, Economy Minister Nebojsa Ciric said at a business forum in Belgrade today.

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For overdue payments accumulated until that date “we will come up with a form of reprogramming,” Ciric said without elaborating or assessing the impact of the new measures on the budget. The payments currently take an average of 130 days, the head of Serbia’s Chamber of Commerce, Milos Bugarin, said last week.

Serbia has to keep its 2011 fiscal gap below 4.1 percent of gross domestic product and trim it to 3.2 percent next year, as agreed with the International Monetary Fund, whose delegation is currently in Belgrade discussing a new precautionary arrangement with the country.

The Balkan nation needs to raise economic growth to at least 4 percent annually in order to plan balanced budgets, Ciric said. The economy expanded 2.4 percent in the first quarter after output rose 1.7 percent in the previous three- month period, according to Serbia’s central bank, which expects 2011 growth at 3 percent.


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