The situation is not bad – the main things in the program are respected, such as reducing public debt, low budget deficits and increasing public investment, but many reforms are delayed. The biggest problems are the unregulated public sector earnings system and the mismanagement of public companies.
Following a recent visit by the IMF delegation, a report on the state of play in Serbia regarding the program under implementation has been published. According to experts from this international organization, there is no reason to worry because the program is currently being implemented (at least with some delays), which in other words means that the fiscal situation is good: the projected budget deficit is low and allows for reduction of public debt next year as well.
There are, however, a couple of possible problems – above all, slowing growth in Europe, which can easily spill over into Serbia in the form of lower investment inflows and declining exports, as well as growing public sector wages faster than the economy for the second consecutive year, which is not sustainable. Special attention was given to the steps for tax administration reform, where the essential obligations were separated from the less important ones, their concentration in a smaller number of centers, and the new recruitment and training process for new employees (employment of about 2,000 new workers in tax administration is envisaged), purchase new ICT system and greater use of risk analysis in tax administration.
One important step forward is the creation of a Department of Fiscal Risk in the Ministry of Finance, which should address their quantification and scenario analysis (what to do if any of these occur). Including fiscal risk analysis in public policies is one of the important parameters of public finance management, albeit with such delays, as this area is one of the obligatory parts of the fiscal strategy.
Privatization of Commercial Bank – it is stated that the plan is to sign the purchase contract in January; Restructuring of public companies – primarily EPS, which will be registered as a joint stock company instead of remaining in the status of a public company, while the focus will be on reducing the number of employees, as well as improving management. A new electricity price will be set by June to incorporate all production costs;
Privatization or closure of restructured companies, with 84 remaining, with about 30,000 employees. Re-attempt to privatize Petrohemija and MSK, and close down some Resavica mines; Adoption of a new strategy for managing public and state-owned enterprises, as well as the termination of the policy of holding the directors of these enterprises in v.d. status; Increasing the quality and transparency of domestic statistics.
An economist jokes that the abbreviation for the International Monetary Fund (IMF) has acquired a new meaning: it is mostly fiscal. In other words, as long as the public finance situation is in order, IMF estimates will be fairly mild. On the other hand, we have to admit that the Government has done most of the things it has committed itself to, and the ground for criticism is rather narrow. However, it is important to note at the same time that most of these measures were neither profound nor politically painful or problematic, such as the wage and pension cuts at one time or another. So, if the program itself was not too ambitious, its fulfillment is not very commendable, just like the five in physical education in elementary school.
The main reforms that the Government should implement relate primarily to the introduction of the rule of law, the independence of the prosecution and the judiciary, increasing business security, reducing corruption and limiting party and political influence in the economy. None of this is on the agenda yet.
