April 25, 2016 / 2:52 PM / in a year

Serbian watchdog urges re-elected leader to take tough action on economy

Serbian Prime Minister and leader of the Serbian Progressive Party (SNS) Aleksandar Vucic reacts after elections in Belgrade, Serbia April 24, 2016. REUTERS/Marko Djurica

BELGRADE (Reuters) - Serbia’s newly re-elected Prime Minister Aleksandar Vucic must take urgent action to tackle loss-making state-run companies, cut up to 35,000 government jobs and keep a tight grip on public spending, the country’s fiscal watchdog said on Monday.

Vucic, a former hardline nationalist who now wants to take Serbia into the European Union, won four more years in power on Sunday, securing another absolute majority in parliament.

The government-appointed Fiscal Council cautioned that there must be no let-up in the austerity policies that Vucic’s government followed over the last two years to reduce a big budget deficit.

“There should be no slackening on ... public sector wages and pensions,” council chief Pavle Petrovic told a news conference.

The number of government employees must be cut, he added.

“We are talking about 30,000 or 35,000 people.”

Vucic, who called Sunday’s election two years early to seek a mandate for negotiations to join the EU, won 48 percent of the vote, the same as in 2014, according to nearly complete results from the Electoral Commission.

His conservative Progressive Party will retain its absolute majority in the 250-seat parliament, although its strength will fall to 131 from 158 seats because more parties reached the five percent threshold needed to get in to parliament.

Bojan Pajtic, head of the opposition Democratic Party, told Reuters his party had complained to the Election Commission over the government’s tight grip on the media during the campaign and of numerous irregularities including vote-buying and non-existent voters.

International observers, including the Council of Europe and the OSCE, said fundamental freedoms were respected, although there was biased media coverage, undue advantage for incumbents and a blurring of state and party activities.

PAINFUL REFORMS

Serbia, which has 18 percent unemployment, will have to undertake painful economic reforms both to qualify for EU membership and to meet the terms of a 1.2 billion euro ($1.35 billion) standby loan agreement with the IMF.

Petrovic reminded Vucic of the government’s promise not to extend protection from creditors for a group of big state-owned companies, including the RTB Bor copper mine and coal mine operator Resavica, beyond May 31.

“By then, the remaining 11 companies will lose protection from creditors. That means either privatization or bankruptcy,” Petrovic said.

Analysts think Vucic will probably continue to govern in coalition with the Socialists, who came second with 11 percent of votes, to broaden his support.

If so, the splintered opposition will be led by ultra-nationalist Radical Party of Vojislav Seselj, acquitted by the U.N. tribunal in The Hague last month of war crimes during the 1990s breakup of Yugoslavia.

The Radicals, who won 8 percent of the vote, oppose Vucic’s pro-EU policies and instead demand an alliance with Russia.

Zoran Stojiljkovic, political science professor at Belgrade University, said the elections were called to cement Vucic’s power before more unpopular austerity measures.

The EU was not an issue for most voters, he said.

“The main issues for most are poverty, unemployment and corruption.”

Additional reporting by Adrian Croft, editing by Ed Osmond

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