Serbia’s public debt is certain to exceed its limit and therefore the government should as soon as possible draft measures to bring it back to permitted levels.
This was heard on Tuesday from Dean of the Belgrade Faculty of Banking, Insurance and Financing Hasan Hanić.
According to the methodology of the Ministry of Finance, Serbia’s public debt at the end of September 2011 amounted to 44.8 percent, while according to the methodology of the National Bank of Serbia it reached 46.7 percent, whereas according to the law this limit is set at 45 percent of the GDP.
However, Hanić underlined that it is not the height of the debt that is worrying, but rather the speed of its rise.
“Lately, the public debt has been increasing at a large, excessive speed both absolutely and relatively,” Hanić said.
The presentation of the Macroeconomic Analysis and Prognosis magazine released the data that in the last three years Serbia’s public debt went up by around EUR 3.5 billion.
Three years ago the public debt was below 30 percent of the GDP, while two years ago it was under 40 percent of the GDP.
Hanić pointed to the unfavorable structure of the public debt – a large percentage of short-term debt in the total indebtedness, adding that the currency structure of the debt is also bad given that over four fifths of the total debt is expressed in foreign currencies.
The cause of the high public debt is fiscal deficit, which went up from the planned 4.1 percent of the GDP to 4.5 percent.
The public debt is also influenced by a drop in budget revenues and lowering of tax basis because of lesser number of salaries.
Hanić said that worsening of business conditions will trigger considerable capital outflow from banks, part of which will certainly be returned to their headquarters, which will reduce total funds available for loans to companies.
“The foreign direct investments, which are crucial for our economy, are also likely to reduce,” Hanić said.
More debt
Meanwhile in parliament, some opposition parties announced they would not vote for bills that will raise the national debt by a total of EUR 83 million.
They said on Tuesday they believed that leads to too much debt, and even some deputies from the parties within the government expressed reservations on Tuesday regarding the issue.
Minister of Spatial Planning Oliver Dulić, who presented the bills to the parliament, said the three laws needed to pass in order to settle some of the problems regarding the work of the judiciary and improve heating, water supply and sewage.
The bills propose a EUR 13 million loan with Komercijalna Banka to buy the Aeroinženjering building and adapt it to accommodate the First Municipal Court.
Another proposal is a EUR 25-45 million loan from KfW to rehabilitate the remote heating system and regulate water supply and sewage in medium sized municipalities.
Source b92.net
