NBS Council member says budget situation is "grave"

BELGRADE Member of the Council of the NBS Governor Stojan Stamenkovic stated on Wednesday that the situation concerning the budget deficit "is very grave." The figure exceeds the planned amount in the first four months of the year, said Stamenkovic, who is a member of the Council of the governor of the National Bank of Serbia (NBS). NBS Council member says budget situation is "grave" Budget revenues were considerably lower than planned, and in the four months of the year they total 25 percent of the annual amount, while expenditures add up to over 60 percent, Stamenkovic told reporters. This gap now needs to be filled, and the minister (Mladjan Dinkic) announced measures and it remains to be seen whether this would be enough, Stamenkovic and expressed the fear that some more steps would have to be taken, especially since certain measures are mutually exclusive. According to Stamenkovic, there are certain points which can be turned into savings, but it is a question whether this would be enough to achieve fiscal balance which is also one of the requests of the International Monetary Fund. This year and the last we compensate the deficit by loans but this has to end or we will break, he said. Stamenkovic underscored that he does not believe the government would freeze pensions and salaries but it will not be able to valorise them as usually. He stated that the growth of the GDP in 2013 would total around 2 percent but in 2014 and 2015, the growth will add up to 4 percent at the most, because we had no investments that would create the capacities for faster growth. "Moderate growth" Also on Wednesday, the National Bank announced that it expected that inflationary pressures will continue to weaken and moderate economic growth will continue in the coming period, which should result in year-on-year inflation returning within the target tolerance band by October and a two percent economic growth this year. In the May inflation report presented at a news conference Wednesday, it was said that the expected drop in inflation will be the result of a drop in prices of primary commodities, stability of the exchange rate of the dinar, and low aggregate demand. Only administered prices are expected to grow in the coming period, chiefly as a result of the anticipated increase in electricity prices, but this will only slow down the drop in inflation and will not bring into question its return within the target tolerance band. The central bank revised its earlier 2013 GDP growth projection of 2.5 percent down to around two percent, chiefly in response to the anticipated lower growth of the euro area economy and other foreign trade partners. Even though both domestic and global demand will be low this year, economic growth is expected based on a recovery of agricultural production and increased use of new production capacities in the automobile and petroleum industries. The NBS projected inflation for 2013 is four plus/minus 1.5 percent. Tanjug

NBS Council member says budget situation is "grave"

Budget revenues were considerably lower than planned, and in the four months of the year they total 25 percent of the annual amount, while expenditures add up to over 60 percent, Stamenković told reporters.

This gap now needs to be filled, and the minister (Mlađan Dinkić) announced measures and it remains to be seen whether this would be enough, Stamenković and expressed the fear that some more steps would have to be taken, especially since certain measures are mutually exclusive.

According to Stamenković, there are certain points which can be turned into savings, but it is a question whether this would be enough to achieve fiscal balance which is also one of the requests of the International Monetary Fund.

This year and the last we compensate the deficit by loans but this has to end or we will break, he said.

Stamenković underscored that he does not believe the government would freeze pensions and salaries but it will not be able to valorise them as usually.

He stated that the growth of the GDP in 2013 would total around 2 percent but in 2014 and 2015, the growth will add up to 4 percent at the most, because we had no investments that would create the capacities for faster growth.

"Moderate growth"

Also on Wednesday, the National Bank announced that it expected that inflationary pressures will continue to weaken and moderate economic growth will continue in the coming period, which should result in year-on-year inflation returning within the target tolerance band by October and a two percent economic growth this year.

In the May inflation report presented at a news conference Wednesday, it was said that the expected drop in inflation will be the result of a drop in prices of primary commodities, stability of the exchange rate of the dinar, and low aggregate demand.

Only administered prices are expected to grow in the coming period, chiefly as a result of the anticipated increase in electricity prices, but this will only slow down the drop in inflation and will not bring into question its return within the target tolerance band.

The central bank revised its earlier 2013 GDP growth projection of 2.5 percent down to around two percent, chiefly in response to the anticipated lower growth of the euro area economy and other foreign trade partners.

Even though both domestic and global demand will be low this year, economic growth is expected based on a recovery of agricultural production and increased use of new production capacities in the automobile and petroleum industries.

The NBS projected inflation for 2013 is four plus/minus 1.5 percent.