Public debt growth rate alarming, experts say

At present, there is no danger of Serbia being unable to pay off its debts by end of 2012, experts believe.

Izvor: Tanjug

Sunday, 03.06.2012.

15:48

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At present, there is no danger of Serbia being unable to pay off its debts by end of 2012, experts believe. Although, there is a growing concern that a failure to change the current fiscal policy could set the country off in that direction in the future, economists say. Public debt growth rate alarming, experts say Faculty of Law professor Miroljub Labus said that the risk was not present for now, but the government would have difficulties borrowing money to repay all the loans that would fall due, as interest rates would be high and that would pose a problem for the 2013 budget. Labus, who served as a deputy prime minister of Serbia in the period between 2004 and 2006, also pointed to the strong impact of the weakening of the domestic currency on the country's public debt, as they were mostly paid in foreign currencies, while the state collected taxes and fees in dinars, which meant that it had to collect increasingly more dinars to repay the same amount of foreign debt. “The state will have to pay off older debts by incurring new ones, and under less favorable conditions at that,” said Labus. Faculty of Economics, Finance and Administration professor Ana Trbovic said that the state was getting into debt in a way not quite the same as when loans were taken out by the economy and citizens, as the state always had to loan more assuming that at some point it would have to pay more as its balance differed from those of enterprises or citizens. She said that there was a concern about the danger of Serbia entering the zone that Greece and some other over-indebted countries had already fallen in, with no ability of repaying debts and with others doubting the possibility that it would return them. Tanjug

Public debt growth rate alarming, experts say

Faculty of Law professor Miroljub Labus said that the risk was not present for now, but the government would have difficulties borrowing money to repay all the loans that would fall due, as interest rates would be high and that would pose a problem for the 2013 budget.

Labus, who served as a deputy prime minister of Serbia in the period between 2004 and 2006, also pointed to the strong impact of the weakening of the domestic currency on the country's public debt, as they were mostly paid in foreign currencies, while the state collected taxes and fees in dinars, which meant that it had to collect increasingly more dinars to repay the same amount of foreign debt.

“The state will have to pay off older debts by incurring new ones, and under less favorable conditions at that,” said Labus.

Faculty of Economics, Finance and Administration professor Ana Trbović said that the state was getting into debt in a way not quite the same as when loans were taken out by the economy and citizens, as the state always had to loan more assuming that at some point it would have to pay more as its balance differed from those of enterprises or citizens.

She said that there was a concern about the danger of Serbia entering the zone that Greece and some other over-indebted countries had already fallen in, with no ability of repaying debts and with others doubting the possibility that it would return them.

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