2013 budget to be "radical turning point"

BELGRADE The 2013 proposed budget constitutes a radical turning point in the implementation of the policy of Serbia's public finance, Mladjan Dinkic stated on Friday. Presenting the budget proposal for 2013 in the Serbian parliament, the minister of finance and economy underscored that the budget deficit in 2013 would be halved relative to this year and that a stop to the exponential growth of the public debt and interest rate expenses has been ensured. 2013 budget to be "radical turning point" He expressed the hope that the parliament will back the bill as the first step and the cornerstone for the stabilization of a complete economic policy in Serbia. Regulation of public finance is not sufficient for an exit from the crisis but it constitutes the cornerstone and the first step toward the goal, Dinkic said. He noted that thanks to the fiscal consolidation measures, the deficit of the Serbian budget in 2013 would total 3.3 percent of the GDP and that the consolidated deficit which also covers the budget of the province, local self-governments and organizations of mandatory social insurance, would total 3.6 percent of the GDP. According to Dinkic, the deficit of the Serbian budget in 2013 would total RSD 121.9 billion since revenues would total RSD 965.7 billion and expenses RSD 1.087,6 billion. This is a cut of over RSD 80 billion relative to the planned budget deficit in 2012, Dinkic said. The deficit was mostly cut by making savings in expenditure, he noted, stressing that the budget revenue would realistically go up by 4.8 percent and expenditure down by 5.2 percent in 2013 compared to this year. Also, compared to the review, expenditure related to social security will be raised by RSD 8 billion, and the funds for capital investments will go up by RSD 4 billion, for the first time in a while. There are also provisions for project funding through loans for infrastructure and energy facilities, mostly from China, Russia and international financial institutions. Regarding agricultural subsidies, funds for companies that lose money will be cut and there will be no more guarantees for the liquidity of companies like Srbijagas and Jat Airways. The subsidies for companies undergoing restructuring will also be lowered, by RSD 500 million and the process deadline is June 30, 2014. The plan for government companies is to privatize those that cannot operate good enough on the market by themselves and make others self-sustainable through a price liberalization, along with a policy of protection for the poor, Dinkic pointed out. The next year's budget contains significant savings in expenditure for purchasing goods and services, and a part of the economic subsidies will be lowered, partly because of the completion of the Fiat project and because of companies meant for restructuring. Commenting on Vojvodina's 2013 budget, DInkic said it will be at 8.4 percent of Serbia's total tax revenue, above the required minimum, and that Vojvodina would have almost RSD 15 billion more than stated in the original budget for 2011. He is pleased the government has fulfilled the promise to propose the budget on time and that the parliament members will have enough time to analyze it, ending years of practice of having a budget debate around New Year's. Serbia's public debt is twice that from 2008, and the interest related expenditure has gone up sixfold, which could lead the country into bankruptcy, he pointed out. The only way to lower the public debt in the long run is to implement a program of mid-term structural reforms, Dinkic said. And while the draft budget met with approval of the ruling coalition in parliament, opposition MPs criticized it, with some conditioning their support. Thus the Democratic Party (DS) said it would not vote for the bill, and described it as "unrealistic and completely inappropriate to the current economic situation. "The problems of the (draft) budget span from its essence to its form. There is no reform approach in it that would represent a u-turn or savings," DS MP and former PM Mirko Cvetkovic told a news conference, held at the parliament building. Head of the Alliance of Vojvodina Hungarians (SVM) parliament group Balint Pastor announced that this party would not vote in favor of adopting the budget bill unless amendments submitted to it by the Vojvodina provincial assembly were adopted first. League of Social-Democrats of Vojvodina (LSV) group chief Aleksandra Jerkov stated that the party would withheld its support unless expenditure for Vojvodina were increased in the budget, in line with the Constitution. LDP party leader and head of MP group Cedomir Jovanovic said the draft was "the pre-election budget of the current ruling coalition", that, according to him, would not last "even six months", and was "the price that the ruling coalition was willing to pay in order to continue to rule". The Democratic Party of Serbia (DSS) also said that they would not vote for the draft unless their amendments were adopted. DSS MP Nenad Popovic stated that the party had submitted "more than 60 useful amendments that could improve the budget", and added: "We will most likely vote against if they are not accepted." After a controversy caused by Mladjan Dinkic posting a photograph on his Twitter account, the session was suspended and will resume on Monday. (Beta, file) Beta Tanjug

2013 budget to be "radical turning point"

He expressed the hope that the parliament will back the bill as the first step and the cornerstone for the stabilization of a complete economic policy in Serbia.

Regulation of public finance is not sufficient for an exit from the crisis but it constitutes the cornerstone and the first step toward the goal, Dinkić said.

He noted that thanks to the fiscal consolidation measures, the deficit of the Serbian budget in 2013 would total 3.3 percent of the GDP and that the consolidated deficit which also covers the budget of the province, local self-governments and organizations of mandatory social insurance, would total 3.6 percent of the GDP.

According to Dinkić, the deficit of the Serbian budget in 2013 would total RSD 121.9 billion since revenues would total RSD 965.7 billion and expenses RSD 1.087,6 billion.

This is a cut of over RSD 80 billion relative to the planned budget deficit in 2012, Dinkić said.

The deficit was mostly cut by making savings in expenditure, he noted, stressing that the budget revenue would realistically go up by 4.8 percent and expenditure down by 5.2 percent in 2013 compared to this year.

Also, compared to the review, expenditure related to social security will be raised by RSD 8 billion, and the funds for capital investments will go up by RSD 4 billion, for the first time in a while. There are also provisions for project funding through loans for infrastructure and energy facilities, mostly from China, Russia and international financial institutions.

Regarding agricultural subsidies, funds for companies that lose money will be cut and there will be no more guarantees for the liquidity of companies like Srbijagas and Jat Airways. The subsidies for companies undergoing restructuring will also be lowered, by RSD 500 million and the process deadline is June 30, 2014.

The plan for government companies is to privatize those that cannot operate good enough on the market by themselves and make others self-sustainable through a price liberalization, along with a policy of protection for the poor, Dinkić pointed out.

The next year's budget contains significant savings in expenditure for purchasing goods and services, and a part of the economic subsidies will be lowered, partly because of the completion of the Fiat project and because of companies meant for restructuring.

Commenting on Vojvodina's 2013 budget, DInkic said it will be at 8.4 percent of Serbia's total tax revenue, above the required minimum, and that Vojvodina would have almost RSD 15 billion more than stated in the original budget for 2011.

He is pleased the government has fulfilled the promise to propose the budget on time and that the parliament members will have enough time to analyze it, ending years of practice of having a budget debate around New Year's.

Serbia's public debt is twice that from 2008, and the interest related expenditure has gone up sixfold, which could lead the country into bankruptcy, he pointed out.

The only way to lower the public debt in the long run is to implement a program of mid-term structural reforms, Dinkić said.

And while the draft budget met with approval of the ruling coalition in parliament, opposition MPs criticized it, with some conditioning their support.

Thus the Democratic Party (DS) said it would not vote for the bill, and described it as "unrealistic and completely inappropriate to the current economic situation.

"The problems of the (draft) budget span from its essence to its form. There is no reform approach in it that would represent a u-turn or savings," DS MP and former PM Mirko Cvetković told a news conference, held at the parliament building.

Head of the Alliance of Vojvodina Hungarians (SVM) parliament group Balint Pastor announced that this party would not vote in favor of adopting the budget bill unless amendments submitted to it by the Vojvodina provincial assembly were adopted first.

League of Social-Democrats of Vojvodina (LSV) group chief Aleksandra Jerkov stated that the party would withheld its support unless expenditure for Vojvodina were increased in the budget, in line with the Constitution.

LDP party leader and head of MP group Čedomir Jovanović said the draft was "the pre-election budget of the current ruling coalition", that, according to him, would not last "even six months", and was "the price that the ruling coalition was willing to pay in order to continue to rule".

The Democratic Party of Serbia (DSS) also said that they would not vote for the draft unless their amendments were adopted.

DSS MP Nenad Popović stated that the party had submitted "more than 60 useful amendments that could improve the budget", and added:

"We will most likely vote against if they are not accepted."

After a controversy caused by Mlađan Dinkić posting a photograph on his Twitter account, the session was suspended and will resume on Monday.