Fiscal consolidation has been satisfactory over the past year, with the government deficit reduced permanently by over EUR 1 billion.
Serbia’s Fiscal Council made this statement on Monday, adding that the new government will face major challenges such as further deficit cuts, the reform of public enterprises and completing the privatization of state-owned companies.
Despite the good results, the state of Serbia’s public finances is far from good and the road to a full recovery will be long, the Council warned.
The enormous public debt, which will rise to EUR 26 bln – or 78 pct of GDP – by the end of the year is the biggest problem, the Council said.
For a full recovery of public finances, the public debt should be reduced to much below 60 pct of GDP, it said in a document titled “Fiscal trends in 2016, consolidation and reforms in 2916-2020”.
The umbrella fiscal objective of the new government should be a reduction of the government deficit to 0.5 of GDP by 2019, the document said.
The government should present a firm medium-term plan to reduce the public debt-to-GDP ratio, the Council said.
Source; B92
