The Fiscal Council: Revision “drives” Serbia into EXCESSIVE indebtedness
The proposed revision of the budget for 2021 made a turn in fiscal policy, because the budget deficit was strongly increased, which will result in an increase in public debt, warned the Fiscal Council of Serbia.
It is added that the proposed revision envisages the deficit of Serbia, instead of 2.9 percent of GDP, or around 1.5 billion euros respectively, amounting to 6.9 percent of GDP or around 3.5 billion euros.
It was pointed out that the increase in the fiscal deficit more than two times, i.e. by two billion euros in relation to the original plan, will be financed by country’s new loans, which will delay the stabilization of public debt in relation to GDP.
As it is evaluated, the best side of the proposed revision is a strong increase in state investments in infrastructure, because it effectively stimulates economic growth, and there is a need for that because the condition of basic infrastructure in Serbia is very bad.
It is estimated that the portion of state aid package of around 600 million euros, which enables the payment of half of the minimum wage for three months per employee, and for which private enterprises which do not have problems with business due to the pandemic can apply as well, including pharmacies and retail chains, is very problematic as well.
It is pointed out that in the event that Serbia, similar to other CEE countries, has created objective criteria for the selection of enterprises that can receive assistance, it could have saved and reduced country’s indebtedness in 2021 by around 300 million euros.