With the third package of measures, which is worth over two billion euros, we provide our economy with additional help and thus give it the opportunity to survive until the moment when the mass vaccination is over, to be ready to continue. This time we are giving help to all companies in the private sector, now also large ones and 424 of them will get it. That is a big change compared to last year’s package of measures, when the minimum wage was given to 1,050,000 million employees. This year, about 1.5 million employees will get three times the minimum wage. We also provide sector support for the most vulnerable branches. That has never happened in Serbia before. Never in a crisis has the state acted so responsibly, especially towards the private sector, with a responsible macroeconomic policy that preserves all macroeconomic indicators. In addition to the six billion we provided last year, we will now have two more. The end result – our economy has survived. There are no mass layoffs, closing of factories, says Sinisa Mali, Minister of Finance in the Government of Serbia, in an interview for our newspaper, commenting on the new package of measures adopted at the government session.
– We are working to save production capacities, keep jobs. It is better for the state to take on the greater burden of the crisis, and we have done that. The results of two packages from last year show that we helped in the right way. We have the smallest drop in GDP in Europe, public debt of 57.7 percent of GDP, far below 60 percent, foreign direct investment is almost three billion, industrial production is 4.1 percent higher in December. We have money, we are completely liquid. Employment in the third quarter of last year was higher than in the first. The most important fact is that the collection of VAT in 2020, compared to a year earlier, is five percent higher in gross amount, and 30.4 percent higher in net amount. VAT is a direct indicator of the level of our economic activity. All measures proved to be excellent: 100 euros, minimum payments, deferral of taxes and contributions, guarantee scheme, salary increase, pension. The demand did not fall for us, and on the other hand, we did not lose our jobs.
Why, when all the indicators are a good minimum, do you give such a large number of employees, even in large companies?
Because we have feedback from a large number of large companies that they are slowly but surely feeling the crisis. Large companies were thought to be more stable and stronger, but the pandemic lasted more than a year. The last thing we want as a responsible state is for a large company to fail, because that means mass layoffs, loss of the market, continuity in business. It costs less to help them at this point, to endure until the fall. It is not a big investment for the state, but for each individual company, help is welcome.
Many sectors are not affected at all, they have growth. Why do you help them too?
I can’t agree that they aren’t. Give me an example of one person in the world who is not affected by the corona. It is true that there are sectors that did better, maybe they will not apply for help. Fortunately for us, a smaller number of sectors have been affected. But how to help those who are more affected than those who are affected in any case. We have made the decision not to punish those who are better off. Those who are better off pay taxes to the budget, which is why we help everyone. It was an idea for us to show solidarity, unity. Plus to help the more vulnerable. That is why the third package is a combination of measures with sectoral assistance.
Why did you limit the sectoral aid only to carriers and hoteliers, there are still those at risk?
They are on the brink of survival and this help means a lot to them. We will pay 600 euros for 6,125 buses within six months. We will save their jobs. The most vulnerable will receive an additional full minimum, and these are tourist guides, car rental agencies, caterers, in tourism. Over 65,000 employees in 12,000 companies can count on help. We give for city hotels. We believe that the whole economy needed help. How to punish those who fought harder or had a little more luck in this pandemic. None of the critics ever told me the criteria by which this help should be given.
They were talking about a drop in operating income?
How much? I also asked Pavle Petrovic and economists if it was five, ten, 20 percent. And no one told me. Who is now the one who will discriminate and say that in a worse position is the one whose fall is 30 percent than the one whose fall in income is 20 percent. The one who earns a billion euros if he loses 30 percent, he has 700 million euros left, and the one who earns 1,000 euros and loses 20 percent, he will fail. We are also criticized for helping citizens. They say don’t give to everyone. And to whom to give. What is the criterion, you say.
For example, the average pension is 250 euros, and the salary is 370 euros, as much as two thirds in Serbia receive?
Who will go public and say that you who receive 400 euros will not get anything. Maybe both his father and mother died of the corona. That sounds nice when someone says they should get poorer, and no one went a step further to say who they are. And is poverty only a criterion, because we have social measures. What we are doing are measures to overcome the negative consequences of the corona virus. That’s why we help everyone. Pensioners are endangered and we give them another 50 euros in addition to the 60 that everyone receives. And when you look at how many have a higher pension than the average, there aren’t many of them. These people spend money, VAT collection is excellent and it maintains economic activity. We have given security to the citizens, to say see the state in crisis is helping us. It’s not all in the money. The message we send is important.
The Fiscal Council (FS), as the controller of public finances, criticized you for the financial generosity of the measures. They said a better result could be achieved with the 300 million euros that were targeted?
I do not agree with the concept of FS, which is costly. They say you will borrow. It is a missed topic and no one in the world has been talking about it for two years. Everyone says forget about the deficit, the public debt. When the situation was normal, we acted responsibly, we had a surplus for four years, we reduced the public debt. And now we are pursuing a responsible policy only according to different rules, and the results show that. If we didn’t have those results, I would say – gentlemen, our approach is wrong. They criticize the approach, which proved successful last year. We are indebted, but we are repaying our debts. And with the new package, the public debt will not be higher than 60% of GDP. Our goal is the growth of the economy of six percent, we have money in the budget for investments, we have increased salaries, pensions, the minimum price of labor. What’s wrong with that? Look at the statements of the officials of the World Bank, the ECB, the Fed, the IMF. The direction of all countries in the world is to save their economies and reduce the negative consequences of the virus. The economic policy in the world has changed and the question is no longer how much money you have invested, but whether you need more.
Employers say we are creating jobs and there is no help for us. The minimum goes to the employees, and we are left to pay taxes to the state?
Isn’t it helpful to keep their workers. We are trying to increase the demand for the products of those factories through higher salaries and pensions. The state fulfills all its obligations in a day. Through a guarantee scheme of two billion euros, plus a 200 million euro loan through the Development Fund, we have provided those who need liquidity support and working capital at extremely favorable interest rates. There was also a moratorium on loan payments. We also postponed the payment of taxes and contributions in 24 installments. When we came out with a package of measures last year, we reached such an agreement with small entrepreneurs. They accepted the measures, took the money and now they are asking for a tax write-off. No problem, but let them return what they got from the state. Counting on those taxes, we made a budget for this year. To whom should we reduce pensions, salaries, etc.
These days, the first installment of deferred tax was paid. How much money was paid, what do you see from that data?
The collection of these deferred taxes and contributions is 30 percent higher than expected. Instead of the three billion we expected, calculated in 24 installments, we received 38 million euros. The tax administration is looking to see if a company has not complied with its obligations, and if it has not, it will have to return the money it received from the state at once. It is an example of an organized state. If we did everything we said, then we expect others to do the same.
You have announced a new guarantee scheme and that the state will accept a higher risk for loans. How big?
The new guarantee scheme is very important for us because we have identified companies that, despite the state guarantee, cannot get a loan from banks. We are negotiating another guarantee scheme with the banks. They have already approved 13.5 million euros in loans under the old guarantee scheme, which has maintained the company’s liquidity.
You made an offer to freelancers to pay taxes, and according to their reactions, I would say that they are not satisfied. What payment response do you expect?
Their association says that, but in the past few days, many of them contacted the Tax Administration to accept the offer, some of them have already paid taxes. Many of them are organized through legal entities or as entrepreneurs and already pay their taxes properly. A number of them say that they did not know, they did not hear that they should pay taxes, even though they are adults who should know that if they have income from abroad, they have to pay a part for taxes. We do not meet the needs of gamblers or those who have earned half a million euros by renting luxury real estate in the center of Belgrade. A person who rents out an apartment for a day cannot be a freelancer. Those who earned 200 or up to 500 euros a month have an offer to pay taxes in 120 installments, without interest. The installment is 26 euros per month. With the amendments to the Law on Income Tax, which are scheduled for April, we give them the opportunity to legally enter the system and accept the extended hand. In Serbia, 2.2 million people pay taxes regularly, and they are those who did not give a dime to their country. Their only request is that their obligations be written off because they are entering into debt bondage. There is also the aspect of unfair competition. Some give English lessons online and pay taxes, and some don’t. A responsible state cannot support someone who does not pay taxes.
Are you negotiating with the IMF and when and what kind of arrangement can we expect?
In mid-April, we will have the first version of the new arrangement, in the meantime we are working on its harmonization. The emphasis will be on further reform of public enterprises, on increasing the efficiency of their management, on investments in environmental protection, on fiscal rules, reform of salaries in the public sector, on the implementation of the Law on Social Cards. A new arrangement will be valid from July 1, Politika reports.
