The IMF said that the pension hike, scheduled to take effect this month retroactively from October, will increase 2009 spending by more than 50 billion dinars (573.4 million euro/$736.2 million), Beta reported.
The global lender also said that if the government decides to keep the pension hike it should freeze salaries in the public sector at all levels starting from January 1 in order to cut spending.
The government is expected to decide whether to accept IMF’s recommendations by Tuesday, Beta said, adding that IMF has extended its visit to the Balkan country.
An IMF mission is on a visit to Serbia to advise the government on drafting of the country's budget for next year. The IMF has urged Serbia to cut spending and expand its export base to slow inflation and reduce its mounting external deficit. It has also recommended that Serbia should halve its current account deficit set at 18.5% of the gross domestic product projected for 2008.
The country spends 500 billion dinars more than it earns annually, with overspending going mainly to consumption rather than investment, the head of the IMF mission to Belgrade, Albert Jaeger, said in September.
($ = 87.1999 Serbian dinars)