Serbian Finance Minister Diana Dragutinovic said that everyone in the Serbian government agrees that the tax system needs to be reformed, but then backs down at the key moment.

"Everyone agrees that the tax system should be changed, but when the time comes to go from word to action, support is lacking. It seems they are waiting for a better time," she added in an interview for the New Year edition of Novi Sad daily Dnevnik.

According to her, the 2011 budget, with a planned deficit of RSD 120 billion, can be called developmental only in a certain sense.

"I think the role of the budget is stabilization, not development. This budget needed to meet two opposing goals: sustainability and social cohesion. In addition, it leaves enough room for capital spending and co-financing direct foreign investments, such as Fiat. If the investment come through, then the budget is also developmental," she stressed.

Dragutinovic reiterated that pensions and public sector salaries will be raised two percent in January, with the lowest checks getting the biggest boost, and that the budget also pledges more funds for social security.