Fiscal Council warns of budget deficit growth
Serbian Fiscal Council President Pavle Petrović said late on Monday that preliminary data for August show a significant budget deficit increase.
Tuesday, 10.09.2013.
10:05
BELGRADE Serbian Fiscal Council President Pavle Petrovic said late on Monday that preliminary data for August show a significant budget deficit increase. Petrovic added that the Fiscal Council believes the deficit could rise to 5.1 percent of GDP, instead of the 2013 projection of 4.7 percent. Fiscal Council warns of budget deficit growth “The preliminary data for August indicate again a significant budget deficit increase,” Pheetrovic told RTS, but did not specify what the budget deficit was at the end of last month. Petrovic said that, according to the preliminary data for August, there was no increase in the collection of taxes such as the VAT and other levies, which is still lower than planned. “It follows from all this that we will have a significant deficit this year,” Petrovic said, adding that the Fiscal Council believes that the (consolidated) general state budget deficit will be between 5.5 and six percent of GDP, instead of the 5.3 percent at the end of the year as planned by the budget revision. Petrovic said that in its budget deficit calculations, the Finance Ministry did not include certain expenditures, for example, recapitalization of banks (in this case, Agrobanka and the Development Bank of Vojvodina) and activation of guarantees for public enterprises (Srbijagas). But if the expenditures were made visible, which would be in accordance the International Monetary Fund (IMF) methods, the deficit would be even higher, he added. The 2014 budget will have to involve significant deficit reduction, he said. “It remains that the government sees where it can make some savings, but the most important thing is that without substantial savings, the public debt growth will not stop even in 2015 and 2016," Petrovic said. This brings into question the sustainability of public finances and could adversely affect Serbia’s borrowing capacity, he warns. The Fiscal Council president said that the government should focus not only on reducing the deficit, but also on structural reforms, adding that it looks like that a political will to implement the reforms is there. RTS Tanjug
Fiscal Council warns of budget deficit growth
“The preliminary data for August indicate again a significant budget deficit increase,” Pheetrović told RTS, but did not specify what the budget deficit was at the end of last month.Petrović said that, according to the preliminary data for August, there was no increase in the collection of taxes such as the VAT and other levies, which is still lower than planned.
“It follows from all this that we will have a significant deficit this year,” Petrović said, adding that the Fiscal Council believes that the (consolidated) general state budget deficit will be between 5.5 and six percent of GDP, instead of the 5.3 percent at the end of the year as planned by the budget revision.
Petrović said that in its budget deficit calculations, the Finance Ministry did not include certain expenditures, for example, recapitalization of banks (in this case, Agrobanka and the Development Bank of Vojvodina) and activation of guarantees for public enterprises (Srbijagas).
But if the expenditures were made visible, which would be in accordance the International Monetary Fund (IMF) methods, the deficit would be even higher, he added.
The 2014 budget will have to involve significant deficit reduction, he said.
“It remains that the government sees where it can make some savings, but the most important thing is that without substantial savings, the public debt growth will not stop even in 2015 and 2016," Petrović said.
This brings into question the sustainability of public finances and could adversely affect Serbia’s borrowing capacity, he warns.
The Fiscal Council president said that the government should focus not only on reducing the deficit, but also on structural reforms, adding that it looks like that a political will to implement the reforms is there.
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