Serbia’s 2016 fiscal results are excellent and better than planned, Fiscal Council member Vladimir Vuckovic said Thursday, adding that a plan to reduce the budget deficit to 0.5 pct of GDP by 2019 was achievable even though it seemed overly ambitious.
“We believe that the 2016 results are good and excellent and that the budget deficit should be lower than planned. Now is, therefore, a good moment to also set some new medium-term goals,” Vuckovic said, presenting the 2015 report on the Council’s work to the parliamentary committee on finance, budget and public spending.
The plan is necessary in order to get the public debt on a downward trajectory, Vuckovic said.
“Our public debt is high – 75-76 pct of GDP – which is far from the 45 pct legal limit, as well as from long-term economic sustainability. Even with a deficit of 0.5 pct of GDP, the public debt would drop to around 60 pct of GDP as late as 2025,” Vuckovic explained.
The interest the country is paying is exceptionally high, accounting for about 3.5 pct of GDP, he said.
“To also reduce this expenditure we must go for a lower deficit, and a deficit of 0.5 pct of GDP would ensure stability and prepare us for new shocks, while growth could accelerate,” Vuckovic noted, adding that the goal was achievable and not “in the realm of science fiction.”
It would also require keeping public sector salaries at the same level in 2017 and doing the same with pensions over the next two years, he added.
