Former National Bank of Serbia (NBS) governor Dejan Soskic pointed to alarming trends in Serbia and warned that the country faces serious problems.
Speaking at the 14th Economic Summit in Belgrade on Monday, Soskic stated that 39.1 percent of the budget went this year towards debt repayment.
Soskic, a professor at the Belgrade School of Economics, recalled that the budget deficit in 2008 was 1.9 percent of GDP, and NBS estimates for the first quarter of 2014 show that it increased to 8.6 percent of GDP. Serbia’s total public debt was 48.2 percent of GDP in 2008, while this year it reached 65.1 percent and continues to grow.
Serbia still has no agreement with the IMF, nor has a previously discussed stand-by arrangement been concluded, Soskic noted.
Head of the IMF office in Serbia Daehaeng Kim said Monday that the deficit of approx. 10 percent of GDP in Serbia is higher compared to other countries, warning that the long-term sustainability of balance of payments is brought into question.
The share of public debt in GDP increased from 30 to 65 percent from 2008 to date, while in the same period the average inflation rate in Serbia was 8 percent, the highest in the region, Kim pointed out.
Cost cutting is the first step towards macroeconomic stability, said Kim, stressing that a stable framework requires a broader monetary policy which must be cautious but able to withstand all shocks.
Source SerbGov
