Serbia's First Deputy Prime Minister Aleksander Vucic (File Photo: Reuters)
Serbia's first deputy prime minister Aleksander Vucic (Reuters)

Serbia's first deputy prime minister wants to eradicate bloated state-owned companies, put an end to bumper public salaries and bonuses, and curb international bailouts in a bid to boost the economy through the private sector.

As part of IBTimes UK's special Serbia in Focus series in Belgrade, Aleksandar Vucic delivered a scathing attack on the previous socialist government's well-documented corruption, which led the economy to the brink of collapse.

"We are experts in corruption and we're experts in extortion but this is now times gone past," said Vucic.

"We are putting an end to public-owned companies acting as if they are a state within a state and awarding themselves salaries and bonuses while still being subsidised by the government."

Vucic said that, years ago, parents would encourage their children to get a job in a public company, because civil service jobs paid 13% higher salaries and bonuses than the private sector.

"How is this possible? We are changing this. We have 25% unemployment and we have problems with our budget deficit. But how do you think we are going to cut this by 2% when we are wasting money elsewhere? Why, because we're hypocrites," said Vucic.

"Experts have said we have to reform our economic policies for over 10 years, but when we try to do it we get stabbed in the back.

"I say, OK, go ahead. Go into the street and tell private companies that they have to pay 30% corporation tax and destroy the economy even more."

"I am Not Going to Butter Your Bread"

Serbia has one of the most attractive tax systems in Europe, as workers only pay 10% tax on their salary while corporate profit tax stands at 15%, and value-added-tax at 20%.

However, around a quarter of the population remains unemployed and GDP growth has remained negative since the credit crisis.

Prior to 2008, Serbia recorded an average of 4% growth annually.

"We need to cut our budget by €800m but we face a number of challenges," said Vucic.

"We get criticised for making cuts but where would the critics suggest in taking it? If we increase VAT to 25%, we'll destroy our economy even further.

"People can sit in the coffee shops and tweet about how much they disagree with us, but they have too much time on their hands.

"I am not going to butter your bread. I am not interested in socialist self-management. We need to encourage the private sector and the future of the country lies in capitalism."

IMF Monopoly Money

Serbia's unemployment rate has nearly doubled since the year before the credit crisis, and the average net wage is €380 per month.

The government is stuck between trying to appease the voters and trying to reduce spending, create jobs and provide sustainable growth for the economy.

Vucic said that the government's plans to woo major foreign investors would not only be able to provide this future growth but would also help Serbia avoid massive international bailouts.

"We bought bonds many years ago but this is coming home to roost. We have got to pay creditors back," said Vucic.

"However, I am not supporting the idea of taking more loans when the interest alone is €1bn. Who is going to earn that money? I am not taking the International Monetary Fund's Monopoly money that doesn't exist anyway.

"The US can't save us, Russia can't save us, Germany can't save us and the sheikhs in the Middle East can't save us unless we create a sustainable future through the growth of the private sector."