In response to the economic crisis and in a bid to regain the confidence of international financial institutions and lenders, the Serbian government adopted a series of austerity measures on October 8.

Depending on the level of renumeration, civil service salaries are to be cut by 20 to 25 per cent. VAT on products other than basic necessities will be increased from 8 to 10 per cent. Subsidies for public companies will be reduced, and the government intends to increase efforts to combat the black economy, “which still accounts for 31 per cent of activity” in the country, explains Politika.

In justification for the measures, Finance Minister Lazar Krstic cites Serbia’s excessively high spending deficit, which is expected to amount to 4.7 per cent of GDP in 2013, and public debt that has reached 60 per cent of GDP.