Fiscal Council warns that there will be new large borrowing next year

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While government representatives claim that the republic’s coffers are under control, the Fiscal Council warns that there will be new large borrowing next year. They also warn that interest rates have risen. Economic experts say that Serbia is borrowing three times more expensive than before and that the interest on the state’s debt will continue to rise.

Year after year, Serbia is only in debt. More than a month ago, it took a loan of one billion dollars from the United Arab Emirates, which the government claims is favorable and is a “real gift” in relation to borrowing conditions in the markets. Whether it was a gift or not, the practice of borrowing is not the end, because the Fiscal Council forecasts the same scenario for 2023.

“Serbia will have to take on significant debt. The debt of four billion is coming due, for which she will borrow in order to be able to pay it back. Two to three billion will be related to deficits. On the other hand, Serbia already has some reserves, it has already borrowed from the Emirates. Somewhere around three to four billion euros will certainly have to be borrowed additionally, and interest rates are now at least seven to eight percent”, said Pavle Petrović, president of the Fiscal Council.

“What is an additional problem is that the Euribor will continue to rise and the European Central Bank has announced an increase by the end of the year one more time, maybe even two, which means that interest rates on Serbia’s debt will also continue to rise.” And that means several hundred million euros more per year for repayment of existing loans. Therefore, we will repay the existing loans more expensively, and on that basis, 100, 200 million euros more will flow out of the country than now, and there will be less money for all the needs of the state”, says Milan Ćulibrk, editor of the NIN weekly.

A year ago, Serbia borrowed as much as 1.75 billion euros on the international market in just one day. Why is the state increasingly in debt, if President Aleksandar Vučić often describes the country as an economic tiger?

“We have an extremely low level of domestic savings, you must know that, especially your viewers, that we are at the very bottom of Europe in terms of the level of domestic savings and its share in the gross domestic product.” Almost only Montenegrins were behind us. The share of our domestic savings in the distribution of GDP is constantly low and ranges in the last 10-15 years from a minimum of 7-8 to a maximum of 13-14 percent. When we take everything – both domestic savings and foreign direct investments and portfolio investments and so on, we still lack money”, emphasizes Milorad Filipović, professor at the Faculty of Economics.

And in order for there to be money and not to get into debt, experts say that the state must be much more careful about what it spends.

“And, therefore, it is recommended not to spend what is not necessary.” And the new stadiums that are announced in the next year and another 7-8 stadiums throughout Serbia are certainly not necessary”, says Ćulibrk.

“In addition to that, investments in waste water treatment, connecting the whole of Belgrade or other large cities to sewage systems, building some capital infrastructure – that cannot wait and it is necessary”, says Prof. Filipovic.

Data from the Ministry of Finance show that, at the end of August this year, Serbia’s public debt amounted to more than 32 billion euros, which is 53.4 percent of GDP. According to the latest published data of the Public Debt Administration, the state’s indebtedness at the end of September was higher by another 500 million euros, N1 writes.

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