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Serbia Announces Austerity Measures To Avoid Bankruptcy

Serbian Finance Minister Lazar Krstic said the government in 2014 will introduce "solidarity taxes."
Serbia's government has announced austerity measures, including a plan to cut some public-sector salaries by up to one-quarter, in a bid to reduce public debt and avoid bankruptcy.

A six-point package presented by Finance Minister Lazar Krstic at a government meeting also included a value-added-tax increase from 8 to 10 percent for basic goods and the slashing of state subsidies and public-sector spending.

Krstic said the government in 2014 will introduce "solidarity taxes," ranging from 10 percent to 25 percent on salaries in the public sector that are above 60,000 dinars ($712) a month.

Serbia's economy contracted by 1.7 percent last year and unemployment is at almost 25 percent.

The government has foreign debt of 19 billion euros ($26 billion) and a budget deficit of 6.5 percent of annual GDP.

Based on reporting by AP and AFP