The deficit in the state treasury increased to 8.75 percent of GDP. – Subsidies are higher by 626.5 million euros compared to April.
The state must once again change the budget for this year, and it is doing that for the second time due to the consequences of the pandemic on the economy. The government has made a proposal for the rebalance of the state treasury, which has already reached the assembly, and it should be before the deputies at the beginning of next week.
The deficit in the state treasury this year increased to four billion euros, which is 8.75 percent of the gross domestic product (GDP). The total state revenues of 10.7 million euros and expenditures of 14.7 millione euros are projected. The deficit in the state treasury exceeded four billion euros, amounting to about 4.12 billion euros, while in the first rebalance at the end of April, the deficit was expected to be around three billion euros.
This is the biggest deficit in public finances in the last fifteen years, and it was made because of the costs that the state had because of the crown, which the government stated in the explanation. The public has already been informed that the budget deficit this year will amount to almost nine percent of GDP, because it was announced after the last revision of the current arrangement with the IMF.
The second rebalance shows that the total budget revenues did not fail, because they are 2.4 percent higher in relation to the amounts envisaged by the budget revision from April.
A gap has been made on the expenditure side. Current expenditures increased in relation to the amount planned by the rebalance from April by 727 million euros. Subsidies increased by 626.5 million euros compared to the rebalance from April. The reason for the increase is mostly the funds provided for the payment of 60 percent of the minimum wage for two months to economic entities, the allocation of subsidies to support the hotel industry due to difficulties caused by the Covid 19 pandemic, the Public Company “Roads of Serbia” for state roads, Corridors of Serbia for the purpose of completing the construction of highways in the Republic of Serbia, for direct incentives in agriculture and other, it is stated in the explanation of the rebalance.
The proposal for amendments to the budget law states that funds are needed to finance the budget deficit and all other obligations of 7.5 billion euros. It is planned to provide that money from loans from domestic and international commercial and multilateral financial institutions and foreign governments in the amount of a maximum of 591 million euros.
The budget rebalance was made according to the projection that the economic decline for 2020 will amount to one percent, which is a change upwards compared to the April projection when a decline of 1.8 percent of GDP was expected. In the absence of these measures to support the economy and the population, the fall in GDP in 2020 would be greater, amounting to about five percent, the Government of Serbia estimated.
As a reminder, the original budget for 2020 envisaged revenues of 10.7 million euros and expenditures of 11 million euros, so that the deficit would amount to 300 million euros or 0.3 percent of GDP, Nova Ekonomija reports.
