The Fiscal Council estimated that the proposal for this year’s budget rebalance unjustifiably increased costs, which will increase the deficit in the state treasury from the previously planned three percent of gross domestic product (GDP) to about seven percent, Council President Pavle Petrovic said today.
“Budget expenditures were additionally increased by two billion euros with the budget rebalance, of which the expenses of one billion euros are justified,” said Petrovic at the session of the Serbian Parliament’s Committee for Finance, Republic Budget and Control of Spending Public Funds.
He pointed out that new state borrowing will be needed to finance additional budget expenditures, because “there is no money from the sky”, which will increase the public debt from 58 percent of GDP to about 61 percent.
“Investments in infrastructure are justified, which are the best economic measure for stimulating economic growth,” Petrovic assessed and added that additional investments in ecology were justified.
According to the assessment of the Fiscal Council, as Petrovic pointed out, investments in the armament of the Serbian Army are “too high”, and also the Government is again proposing a non-selective distribution of aid to citizens and the economy.
He reminded that at the time of the adoption of this year’s budget, the Fiscal Council warned that salaries in the public sector should not increase in 2021 because money will be needed for a new state aid package, and the Government did not accept that proposal.
Explaining the proposal of the budget rebalance at the session of the Committee, the Minister of Finance Sinisa Mali said that the main reasons for changing the financial plan of the state are new, the third package of assistance to the economy and citizens, stimulating economic growth and mitigating the consequences of the corona virus pandemic.
He stated that the third aid package is worth 2.1 billion euros, which is 4.3 percent of GDP.
“Including the previous two aid packages, worth 5.9 billion euros, the state has provided aid to the economy and citizens of 17.2 percent of GDP,” Mali said.
Commenting on the assessments of the Fiscal Council, he said that the budget deficit will not exceed 60% of GDP even after the rebalance. He also pointed out that investments in weapons are justified.
Budget expenditures increased by 2.1 billion euros, so that the deficit will amount to 3.2 billion euros.
The government did not change the projection that GDP growth will be six percent this year, and it is estimated that inflation, due to rising electricity prices and the expected rise in oil prices, will amount to 2.4 percent, which is 0.4 percentage points more than before was predicted, Beta reports.
