Belgrade  – Serbia’s plan to cut thousands of jobs in the administration is a “good start,” but not enough to meet the International Monetary Fund (IMF) lending criteria, Central Bank Governor Radovan Jelasic said in an interview released Saturday.

“Firing state bureaucrats, regardless of whether 10,000 or 14,000, will bring only a third of the necessary spending cuts,” Jelasic told the weekend edition of the daily Danas.

Prime Minister Mirko Cvetkovic’s government has announced an administration reform plan aimed at cutting spending in 2010 in hopes of meeting deficit criteria agreed upon with the IMF for a two-year, 4-billion dollar standby loan, set to be delivered in four tranches

The original deficit target, set in March, was 3 per cent of the gross domestic product, but Serbia failed to meet it. So after disbursing the first, 1-billion-dollar tranche in May, the IMF delayed the second tranche earlier this month.

The IMF relaxed the deficit target for the year to 4.5 per cent of GDP, but wants Serbia to keep the deficit below 3.5 per cent of GDP in 2010 in order to release the last two tranches of the standby loan.

Spending cuts can only save 10-12 billion dinars (156-187 million dollars) in 2010 under the current plan, instead of the 30-40 billion dinars required by the IMF, Jelasic said. The Serbian government has so far refused to boost revenue by hiking value-added tax.

“If we gave up on the VAT, then other taxing sources can be the alternative,” Jelasic said.

The IMF mission is due to visit Belgrade on October 20, when the Serbian 2010 draft budget is to be completed. A positive review of Serbia’s economic policy would lead to the disbursement of the second and third tranches, worth a combined 2 billion dollars. (dpa)