Serbia probably will overshoot its fiscal deficit target for the second consecutive year as revenue collection weakens and the two-month budget gap has already exceeded one-fifth of the full-year plan.
The fiscal gap will be at least 4.5 percent of gross domestic product, compared with a 3.6 percent target, and may be as high as 5 percent if unbudgeted aid to unprofitable steelworks or subsidies to information technology companies are included, said Pavle Petrovic, the head of the Fiscal Council, a three-member body appointed by parliament to oversee government compliance to self-imposed fiscal rules.
The cumulative deficit in January and February is estimated to have reached a “worrying” 35 billion dinars ($404.75 million) and “if this pace of the deficit continues in the coming months, the deficit will exceed 210 billion dinars instead of the planned 122 billion dinars,” Petrovic said today at a Belgrade news conference.
Serbia reported a 6.99 billion-dinar budget gap in January. The consolidated result, which includes local governments, pension and health funds, showed a surplus of 3.8 billion dinars in January, the Finance Ministry said in a March 9 e-mailed statement.
Squeezing the shortfall is key to “avoiding an external debt crisis,” he said.
Staying on track toward balancing the budget through 2016 will require savings of as much as 450 million euros ($585 million) next year, Petrovic said.
Source Bloomberg
