"Serbia must continue with austerity measures"

"Serbia must continue with austerity measures"

“More favorable results in 2015 suggest that Serbia could catch up with the most successful comparable countries in the coming years, if it continues to consistently put in place fiscal consolidation measures,” reads the June report of the Fiscal Council.

In the first six months, Serbia's budget deficit stood at RSD 35 billion, which is over RSD 60 billion below the upper band of the total deficit in the first two quarters, set in agreement with the IMF.

“A better collection of excise duties, VAT and contributions for mandatory social insurance helped trim the deficit by around RSD 15 billion in the first half of the year, and that is a measure of real progress in comparison to the fiscal plans for 2015,” notes the report.

The document also said that that the budget deficit could stand at 3.5 percent of GDP, adding that the real deficit would total around 4.5 percent of GDP at the end of the year.

Favorable fiscal trends in the first half of the year suggest that this year's deficit will certainly be below the planned RSD 232 billion, or 5.9 percent of GDP, and will probably be at 3.5 percent of GDP, reads the latest report of the Fiscal Council.

However, this very good fiscal result is only partial improvement when compared to the entire plan.

A better revenue collection thanks to the reduction of the grey economy and introduction of electricity excises as of August will help curb the deficit by more than one percentage point of GDP.

“That is why our estimate is that the real deficit this year, with which the country would enter 2016, would stand at 4.5 percent of GDP, which is a major drop of 2 percentage points in comparison to the previous year,” notes the report.