Serbia to hit limit of public debt by end of 2011

Serbia will hit the limit of allowed public debt of 45 percent of GDP, Nikola Altiparmakov of the Fiscal Council stated on Tuesday. Along with five more percent of debt based on issued restitution bonds with 2015 as the maturity date, the total will reach some 50 percent, he explained. Serbia to hit limit of public debt by end of 2011 Altiparmakov stated that according to its public debt, Serbia can already be classified as one of the most indebted developing countries in Europe. At a meeting discussing measures that a new government should undertake for Serbia's economy during its future mandate, Altiparmakov said that all the countries in the region such as Croatia, Slovenia, Bosnia-Herzegovina, Romania and the Czech Republic have a public debt at 40 percent of their GDPs, while other countries' debts are even lower, such as Bulgaria (18 percent) and Macedonia (25 percent). He said that it would be pointless and irrelevant to compare Serbia to Germany and other developed countries according to this parameter because they can allow for public debt of over 60 percent. Altiparmakov qualified as positive the fact that a certain portion of Serbia's debt comes from bonds issued on an open market, because it shows where the country currently stands. The fact that a part of our debt has a 7.25 percent interest rate cannot cast us into debt-slavery, because it constitutes just five to six percent of the country's total public debt but it shows the rate according to which Serbia will be able to take out loans in the time to come, unless fiscal consolidation is carried out in the forthcoming years, Altiparmakov said. According to him, if the country ends up forced to take out loans at such interest rates, then it is absolutely clear that it will not be able to avoid a scenario similar to that in the case of Greece. He reflected on the issue as to whether the future government should conduct a tax reform and pointed out that he supports the shift from taxing labor to taxing consumption. Key levers of the new development model should include higher exports, investments and employment, Altiparmakov stated and concluded that the fight against gray economy should be one of the priorities.

Serbia to hit limit of public debt by end of 2011

Altiparmakov stated that according to its public debt, Serbia can already be classified as one of the most indebted developing countries in Europe.

At a meeting discussing measures that a new government should undertake for Serbia's economy during its future mandate, Altiparmakov said that all the countries in the region such as Croatia, Slovenia, Bosnia-Herzegovina, Romania and the Czech Republic have a public debt at 40 percent of their GDPs, while other countries' debts are even lower, such as Bulgaria (18 percent) and Macedonia (25 percent).

He said that it would be pointless and irrelevant to compare Serbia to Germany and other developed countries according to this parameter because they can allow for public debt of over 60 percent.

Altiparmakov qualified as positive the fact that a certain portion of Serbia's debt comes from bonds issued on an open market, because it shows where the country currently stands.

The fact that a part of our debt has a 7.25 percent interest rate cannot cast us into debt-slavery, because it constitutes just five to six percent of the country's total public debt but it shows the rate according to which Serbia will be able to take out loans in the time to come, unless fiscal consolidation is carried out in the forthcoming years, Altiparmakov said.

According to him, if the country ends up forced to take out loans at such interest rates, then it is absolutely clear that it will not be able to avoid a scenario similar to that in the case of Greece.

He reflected on the issue as to whether the future government should conduct a tax reform and pointed out that he supports the shift from taxing labor to taxing consumption.

Key levers of the new development model should include higher exports, investments and employment, Altiparmakov stated and concluded that the fight against gray economy should be one of the priorities.