Minister of Finance and Economy Mladjan Dinkic yesterday stated that preparations are under way to revise the current budget as well as to adopt a budget for 2013.
Speaking to journalists who report on economic trends in Serbia, Dinkic stated that a change in the VAT rate is being prepared, noting that it will not exceed 20% and that VAT on essential foodstuffs will remain 8%.
The Minister observed that the final decision on VAT increase will be made as soon as the expenses in the budget are reviewed.
He said that preparations are also under way to adopt a set of measures both in terms of budget expenses and revenues, which will be in the form of 17 laws.
These bills, he announced, will be forwarded to the Serbian parliament in September, while the largest portion of measures will be enforced in October.
Dinkic noted that effects of these measures will not be felt in this year, but at the earliest in the beginning of 2013.
He reiterated that talks are under way about funds amounting to around €2 billion, and announced the arrival of an IMF delegation with which Serbian representatives will talk about a completely new arrangement.
The Minister explained that he called the IMF to Serbia because the previous talks with them indicated that the frozen precautionary arrangement with Serbia would have no effect, therefore a completely new arrangement should be agreed upon.
We are negotiating liquid funds that will secure regular pensions and salaries, he stressed, adding that these are funds from foreign sources.
The above-mentioned €2 billion are linked to the capital market only in its minor part, which means that the smaller portion will be the state’s debt by issuing securities.
Dinkic said that the government will hold on to the plan to issue Eurobonds this year.
He noted that Serbia’s GDP this year will drop by 0.5–1%, adding that the domestic economy is formally already in recession bearing in mind that in the last two quarters it suffered a GDP drop.
According to statistical data, the drop in the first quarter of 2012 stood at 1.3% and in the second 0.6%, Dinkic said, warning that a further decrease of economic activities can be expected because the agricultural production has been greatly affected by drought.
The deficit of the state’s consolidated account is above 7% of GDP, while the state budget is in deficit of 6.4% of GDP, which is far beyond what had been agreed upon with the IMF, he explained.
Dinkic recalled that according to their agreement, the budget deficit at the end of 2012 should be 4.25% of GDP, adding that revenues were unrealistically projected and overestimated by RSD 20 billion, while expenses were underestimated by RSD 65 billion.
He underlined that urgent anti-crisis measures will be adopted as soon as possible, specifying that these will include certain tax breaks for companies and refunds of the costs for fuel, fertilisers and seed material.
The Minister reiterated that pensions and salaries will not be cut, adding that they will be tailored to the circumstance sin the economy. He also added that there will be no lay-offs in the public administration for the duration of the crisis.
Pensions will be paid regularly and most vulnerable pensioners, whose pension cheque is below RSD 15,000, will receive the first part of the 13th pension from 17 to 19 September, he announced.
Our priorities in the period ahead will be pensions, salaries, social care and the public debt, Dinkic concluded.
Source Serbia Gov.
