Serbian budget deficit has been significantly reduced since the beginning of the year as a result of austerity measures, countering the grey economy and a number of one-off factors, and it is expected to drop to approximately RSD 180 billion or 4.5 percent of GDP in 2015, experts of the Quarterly Monitor (QM) economic publication say.
The authors of the publication, which will be presented on June 23, said that bringing an end to cuts in public sector wages and pensions would be fiscally unsustainable until the GDP increases more significantly, and this cannot be expected before 2017.
At the start of 2015, Serbia’s economy has shown signs of recovery, but the GDP will drop 0.5 percent by year-end, the experts say.
“Any attempt to stimulate GDP by increasing pensions and salaries in the public sector would be counterproductive as it would lead to an increase in fiscal deficit and public debt. This would soon call for a new set of austerity measures,” QM experts warn.
In order to stop the growth of public debt against GDP, the budget deficit needs to drop to three percent of GDP, and any additional reductions in the fiscal deficit should be achieved by cutting expenditures, the economists say.
Source; SerbGov
