Today, the Minister of Finance in the Government of the Republic of Serbia, Sinisa Mali, reacted to the interview of the President of the Fiscal Council, Pavle Petrovic, for the Beta agency.
Mali assessed that his assessment that Serbia lags behind in economic growth has no real basis, since our country is one of the most successful economies in Europe, and that it has shown that it is resistant to the shocks caused by the coronavirus pandemic.
Mali noted that the general characteristic of fiscal councils as independent bodies across Europe is the presence of caution and a certain dose of conservatism in public appearances and analyzes, but that the Fiscal Council of Serbia headed by Mr. Petrovic has long exceeded the usual framework of conservatism and shows more of a political than an economic character, is trying to diminish the achievements that Serbia has achieved in recent years, the Ministry of Finance announced.
“Almost as a rule, the Fiscal Council is the one that regularly underestimates the economic growth rates of Serbia. Let’s just remind that for 2020, the Fiscal Council estimated that the fall in GDP will amount to 3 percent, while Serbia with a fall in GDP of only one percent also recorded one of the best results in Europe. Also, for 2021, the initial estimate of growth of the Fiscal Council was four percent, and even the IMF has a higher projected growth of five percent given that GDP growth will be higher than one percent, although we projected a negative growth rate (-1.3 percent) in the first quarter, which implied an annual GDP trajectory of six percent. The data from the beginning of 2021 support the projection of annual GDP growth of 4 percent, but on the contrary, current trends in all economic sectors show that there are several reasons for optimism regarding the revision of the Government’s projected growth rate,” noted Mali.
The Minister reminded that such results are achieved during the greatest economic crisis caused by the coronavirus pandemic, when much stronger and more developed countries had a huge decline in their economic activities.
He stated that, unlike individuals from Serbia, large international institutions recognize the results of a responsible economic policy.
“The forecasts of the World Bank and the IMF for this year are that the economic growth of our country will be 4.5 and 5 percent, respectively. Our government is more optimistic, because we believe in the measures taken, and therefore a projected growth of 6 percent. 10% growth is planned for the second quarter, but we are confident that we can grow 11.5 percent. If we succeed, and there is no reason to lose optimism, Serbia will return to the old paths of economic success and have a growth of 6 percent at the end of the year. That means we will be at the top of Europe in terms of the success of our economy,” Mali explained.
The Minister said that in the last few years, the foundations have been created for further acceleration of economic growth, and that the share of investments in GDP is constantly growing.
“The low level of public investment was just one of the main objections of the Fiscal Council, which claimed that this level should be 5 percent. That level was reached in 2019, and for 2021 the share of public investment should be a record 7.2 percent. Medium-term comparisons with CEE countries are inappropriate, as they completed the transition process much earlier, and Serbia had to pursue fiscal consolidation, which further affected growth, due to the irresponsible policies of the previous government,” he said.
Mali also reminded Mr. Petrovic that thanks to fiscal consolidation, our country managed to have a budget surplus for four years, thanks to numerous savings and domestic management.
“Thanks to the fiscal consolidation that began at the suggestion of Aleksandar Vucic, Serbia managed to break free from the embrace of economic ruin and to firmly position itself as a country that sees only the path of success ahead. We are not just sporting successes, because what Serbia can do today it is not just fun for the masses, but it is the fruit of serious reflection and getting back on the right track, that is, the foundations of real economic policy,” he said.
He explained that thanks to fiscal consolidation, the country’s economy began to grow, that macroeconomic stability was achieved, and that the state helped both citizens and the economy when it was necessary, with as many as three aid packages.
“Regardless of the fact that Serbia is moving forward with tremendous speed, which is able to help both citizens and the economy, it bothers individuals. But we are not giving up on our citizens and building the country for a better tomorrow. That is why only the third package of assistance to citizens and the economy is worth 2.17 billion euros, which is 4.3 percent of GDP. Including the previous two aid packages, worth 5.9 billion euros, the state has managed to allocate a total of 17.2 percent of GDP,” Mali said.
The Minister of Finance added that the public debt, regardless of the planned benefits, both for assistance to citizens and the economy and for capital investments, will not exceed 60% of GDP.
“I will repeat that the revised budget, which was adopted, envisages an additional 745 million euros for new investments and the continuation of large capital projects. By the new year, we will work on as many as eight highways, and significant investments are planned for the construction and reconstruction of clinical centers and hospitals, that last year we managed to build two Covid hospitals in record time, and this year we are building one in Novi Sad and at the same time building the country, investing in the health system, it certainly leads us forward, with vaccination, and I will remind you that we are among the best in the world in this regard, our economy,” he stated and added that Serbia is not a lonely island, and that the economy largely depends on the opening of other countries, but that optimism should not be lost on this issue either.
Mali concluded that Serbia has shown in trouble how successfully it manages public finances, allocating huge amounts of money in order to maintain the economy, saving jobs and helping citizens, B92 reports.
