Fiscal Council warns: Planned measures are not enough

The Fiscal Council supports the Serbian government efforts to reduce the budget deficit, but warns the planned austerity measures would not be sufficient. The resulting total of RSD 15.7 billion is not enough, even if it were achieved, the Fiscal Council said, adding that its projections put the actual figure that should come as the result of the measures at around RSD 13 billion. Fiscal Council warns: Planned measures are not enough Other urgent austerity measures are required, the council noted, pointing out that the data from the first quarter of 2012 indicated a high probability of a significantly higher fiscal deficit by the end of the year compared to the budget projections. Therefore, other steps towards fiscal stability need to be taken, that would include local authorities and government companies. The goal of limiting expenditure is to slow down the growth of the public debt, which exceeded the legal limit of 45 percent of GDP at the end of 2011 and has kept growing in 2012. This also removes one of the causes of the freeze on the arrangement with the International Monetary Fund. The target deficit for the first quarter could be missed by about RSD 30 billion, and since there are no indications that the negative trends are going to change, the gap will probably continue to grow. The first indicators point out that the deficit in the first three months of this year could be at around RSD 55 billion, instead of the originally expected RSD 26 billion, which is a deviation of around RSD 30 billion in the first quarter, the council stated. So the measures that would reduce the government deficit by only RSD 15.7 billion will not be enough to return the fiscal flows to within the desired range, the council warned. The Fiscal Council supports limitations to issues of guarantees and size of project related loans. However, it believes a more strict control and reduction in issues of government guarantees is necessary in order to avoid a public debt crisis in years to come. The Fiscal Council is an independent state organ, that answers to the Serbian parliament. Tanjug

Fiscal Council warns: Planned measures are not enough

Other urgent austerity measures are required, the council noted, pointing out that the data from the first quarter of 2012 indicated a high probability of a significantly higher fiscal deficit by the end of the year compared to the budget projections.

Therefore, other steps towards fiscal stability need to be taken, that would include local authorities and government companies.

The goal of limiting expenditure is to slow down the growth of the public debt, which exceeded the legal limit of 45 percent of GDP at the end of 2011 and has kept growing in 2012. This also removes one of the causes of the freeze on the arrangement with the International Monetary Fund.

The target deficit for the first quarter could be missed by about RSD 30 billion, and since there are no indications that the negative trends are going to change, the gap will probably continue to grow.

The first indicators point out that the deficit in the first three months of this year could be at around RSD 55 billion, instead of the originally expected RSD 26 billion, which is a deviation of around RSD 30 billion in the first quarter, the council stated.

So the measures that would reduce the government deficit by only RSD 15.7 billion will not be enough to return the fiscal flows to within the desired range, the council warned.

The Fiscal Council supports limitations to issues of guarantees and size of project related loans.

However, it believes a more strict control and reduction in issues of government guarantees is necessary in order to avoid a public debt crisis in years to come.

The Fiscal Council is an independent state organ, that answers to the Serbian parliament.