“The state’s policy towards agriculture in Serbia cannot be clearly seen from the budget for 2024. That’s an example of weakness in the overall conduct of economic policies,” said Danko Brčerević, the chief economist of the Fiscal Council, in an interview with the Beta news agency.
“In this year’s budget, some items for agriculture have been increased, some decreased, all without satisfactory justification. This is an excellent example of the weaknesses Serbia faces in the overall conduct of economic policies,” Brčerević stated.
Mid-2021 saw a sudden surge in global food prices, and the state responded by banning the export of certain agricultural products and limiting their prices in the domestic market. However, this policy had its victims—agricultural producers—whose input and energy costs soared.
Brčerević highlighted that as a result, farmers began protesting, leading the government to improvise “new ad-hoc solutions that, by all indications, were inadequate, prompting a new wave of protests.”
“Economic policies should not be conducted this way. Agriculture constitutes as much as 7.5 percent of Serbia’s total economy, which is significantly higher than in the EU. Therefore, it’s incomprehensible that such an important sector lacks a predictable and clear policy for the next ten years. Instead, ad-hoc solutions are being sought from day to day, which cannot be ideal,” Brčerević stated.
He also noted that the social policy in Serbia, in general, has been neglected. According to him, insufficient funds are allocated for these purposes, less than in other Central and Eastern European (CEE) countries, despite having a higher number of impoverished citizens in Serbia.
“In 2022, the Fiscal Council suggested specific measures to expand the coverage of social policies and increase aid, especially for children and elderly households. This is a currently essential reform, particularly due to the recent acceleration in inflation. Rising food and energy prices, to which the poor allocate a larger portion of their income, are impacting them more than the wealthy. I hope this will be rectified in the budget rebalancing,” Brčerević expressed.
He mentioned that the Fiscal Council recommended amendments to some tax laws to increase the progressivity of income taxes in line with good European practices. According to him, there should be increased taxation for higher incomes and decreased taxation for lower ones, introducing tax exemptions for employed individuals supporting household members.
“Fiscal Council has provided several specific models on how this can be done without impacting total public revenues. Of course, this is a matter of social consensus, and our role was to draw attention to this issue and initiate discussion,” Brčerević stated.
When asked whether building road and rail infrastructure is a priority over other priorities, he mentioned that this infrastructure needs to be developed for several reasons. Firstly, its current condition is very poor, and secondly, it is the highest quality form of public spending that positively impacts economic activity.
Investing public money in infrastructure, as he evaluated, engages the workforce, stimulates the production of construction materials, and has effects on Gross Domestic Product (GDP) far greater than any other form of public spending.
According to him, the long-term impact of building roads and railways continues to positively affect the economy and improve citizens’ quality of life.
“However, attention should be paid to the issue of priorities. A significant portion of infrastructure projects, valued at over 10 billion euros, is being carried out through special procedures, without public feasibility studies, selection based on objective criteria, or standard tenders. It would be good to integrate public investments into a systemic framework so that the country’s indisputable priorities, their exact costs, and what is gained in return are precisely known,” Brčerević stated.
Responding to whether the international EXPO exhibition will “change the face” of Serbia, as claimed by the President of the country, Aleksandar Vučić, Brčerević said that such an assessment would need to be supported by concrete analyses and verifiable numbers.
The construction of facilities for EXPO, along with the National Football Stadium, is another significant project, according to Brčerević, that is not following standard procedures but a special law, with insufficient information about the costs and benefits to the country.
“Without these basic data, it is impossible to say what the effects of this project will be from an external standpoint. If the government already possesses analyses confirming that this is an exceptionally beneficial project for the country, I don’t see why they wouldn’t share this with taxpayers who are financing the project,” Brčerević added.
Discussing the quality of institutions and the level of corruption in Serbia, Brčerević mentioned that global data on institutional quality for over 200 countries and territories show that Serbia has some of the worst institutions in Europe.
“The trends aren’t encouraging either. The quality of institutions in Serbia increased from the early 2000s until 2014, and since then, it’s been declining. Serbia doesn’t rank as poorly in legal regulations; the bigger problem, however, is their implementation, or the rule of law,” Brčerević stated.
He added that Serbia received the lowest rating due to corruption, and the quality of institutions is crucial for the country’s long-term economic progress.
“Serbia may have slightly higher or slower economic growth in some years, but the key precondition for steadily catching up with more developed European countries in living standards is quality institutions,” Brčerević concluded.
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