The current government often boasts that it pays interest and received credit annuities properly, and that the indebtedness barely exceeds 60 percent of GDP.
However, the fact that as much as 40 percent of state exports go to repaying the foreign currency component of the debt indicates that this obligation is very burdensome for the economy. At the same time, the Serbian economy pays a high 60 percent of GDP for the costs of the “general state”, so it is not surprising that it operates without accumulation, and the truncated domestic liquidity of the dinar rests on an annual foreign exchange inflow of 4.25 billion dollars from guest workers.
In recent seasons, the annual GDP of the state of Serbia is around 50 billion dollars, so it seems that the indebtedness of 32.5 billion makes an acceptable 64.1 percent of the total national product. However, this is a street picture of the state of the Serbian economy.
This time, we will leave aside the overestimation of the exchange rate of the domestic currency, which is used to build a significantly higher GDP than the real one. We will focus on indebtedness in Serbia.
Debt 76 billion dollars
It is true that the state of Serbia, as a legal entity, owes 19 billion dollars to foreign and 14 billion to domestic financiers. But, as much as 22 billion are indexed in foreign currency, only 91.6 million euros but in dinars.
However, these are not the only debts in Serbia. The external debt of companies and citizens is 14, banks another three billion dollars. It is true that the loan is the obligation of the borrower, but the state is obliged to provide these entities with access to foreign currency to repay the foreign currency, ie to the dinar to repay the dinar debt.
And companies and banks in Serbia owe 14, citizens 12 billion dollars, a total of 26 billion, of which 15 billion are nominated in foreign currency. When everything is added up, the state of Serbia, citizens and all local economic entities have a total debt of 76 billion dollars, of which 54 billion are foreign currency and 200 million euros in dinars are obligations.
The state, of course, has no income other than that of taxpayers, so, in fact, all debts are repaid by citizens. And those created by the state. And what are those loads?
Interest and loan installments are refunded. When it comes to foreign currency loans, the average interest rate is around 4.5, while it is 10 percent on dinar loans. It turns out that about 4.7 billion dollars a year needs to be raised for interest alone.
But there are also installments. If we take that the average loan is for a period of twelve years, the annual installment is around 6.5 billion dollars. Collectively, 11.2 billion dollars must be set aside each season for loan and interest repayments alone, with a foreign exchange component of 7.95 billion dollars.
The extent of the burden can be seen from the foreign trade balance. Serbia imports 27.1 billion dollars a year and exports 19.8 billion dollars. Of that, close to eight billion goes to repay debt obligations, ie almost 40 percent of hard-to-realize exports. It’s a huge burden, a rope around the debtor’s neck.
It is up to the employees and all citizens of Serbia to fill the budget of the so-called “general state”, which, in addition to the republic treasury, includes municipal, provincial, and budgets of the social and health fund.
All this is done between various types of levies (VAT, customs duties, taxes, excises, registrations…) and capturing 37 percent of the employee’s gross salary. In recent seasons, the total budget for the year is about 29.5 billion dollars.
Finally, the citizens of Serbia spend an average of about 41 billion dollars a year on debt obligations and the needs of the state. Of course, that is from those 50 billion dollars of newly created value.
It is quite clear how little is left for the workers, those who create the newly created value. Hardly anyone can take that picture, BiF reports.
