It is necessary for budget planning for the next year to balance the deficit in the state treasury and to help the economy.
The International Monetary Fund (IMF) believes that increases in salaries and pensions in the public sector should be limited, and that money should be directed to public investments, which is crucial for supporting economic growth. Also, the budget for next year should be balanced so that the deficit, which should amount to two percent of GDP, and assistance to the economy are taken into account.
This is stated in the announcement of this international financial organization on the occasion of their decision on the successful completion of the fourth review of the economic program of Serbia. It is assessed that Serbia continues with the successful implementation of the economic program, which is supported by the Instrument for Policy Coordination.
Tao Zhang, Deputy Director General and Acting Chairman, said the following: – Provided that the economy gradually recovers as currently planned, budget planning for next year should be balanced with support for the economy, and the fiscal deficit should gradually return to sustainable levels. The fiscal space should be focused on public investment, which will be crucial to support growth, while limiting increases in public sector wages and pensions. Identifying fiscal risks arising from the crisis will be important for budget execution and projecting funding needs. Continuous modernization of the tax administration is needed to protect the main revenue streams during the crisis and subsequent recovery.
He assessed that the Covid 19 pandemic had a significant negative impact on the economic activity of Serbia, and that the authorities initiated timely and strong actions. The fiscal package introduced in response to the crisis is one of the largest in the region and provides the necessary support to households and businesses, as well as higher health spending.
According to the IMF, the monetary policy was rightly adaptable, and temporary emergency measures were adopted to help maintain the liquidity of the banking sector and support borrowing. Inflation remains low and the exchange rate is stable.
– Financial sector reforms should continue to support recovery and long-term growth. Priorities include completing the privatization of the largest state-owned Komercijalna Banka, improving capital market development and supporting access to financing for development, the IMF said in a statement.
They repeat the earlier estimate that economic activity will fall by three percent. After easing the “lock”, the economy began to recover, and growth in 2021 is expected to be six percent. The risks are significant given the uncertainty surrounding the development of the epidemic, Politika reports.
