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The President of the Serbian Fiscal Council, Pavle Petrović, assessed that the two biggest risks to the stability of public finances in the medium term are unreformed state and public enterprises and excessive wages in the public sector, because there is no way to reduce unsustainable expenses for these two purposes.
Photo: BETAPHOTO MILAN OBRADOVIC“A special problem with wages is that they are not systematically regulated and their growth is not related to objective economic parameters. And if wages in the public sector grow relatively strongly even in times of crisis, it is difficult to expect that this practice will be easily abandoned during the economic recovery, “Petrovic said in the new edition of the weekly NIN.
As stated, the introduction of a comprehensive salary rating system has been postponed again to 2022, although it was originally announced for 2015.
Speaking of Air Serbia, he said that the company was not operating sustainably even before the crisis.
“If we exclude from the balance the state subsidies for the payment of JAT’s old debt, from 2015 to 2019, the company had an average annual loss of more than 20 million euros instead of the reported profits,” Petrovic said.
According to him, “there are also hidden liquidity problems, since the company was unable to cover past due liabilities with regular business entries, which is a deficit that was offset by debt.”
“The accumulated losses have ‘eaten away’ the capital of the company, which in the formal sense means that the conditions for bankruptcy have been met,” Petrovic said.
He claimed that the pandemic is not the direct cause of these problems, but has exposed them, so instead of the usual cash shortage of € 30 million in 2020, the company is running a deficit of € 60-70 million.
“When we add to that the obligations due this and next year, we come to the conclusion that the company will need at least 200 million euros to survive at the end of 2021,” Petrovic said.
“Sustainable businesses will require fundamental reform, so subsidies must be conditioned by the obligation to restructure.” That is the practice that European countries apply in similar situations, ”Petrovic explained.
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