With the rebalancing of the budget for this year adopted by the government yesterday, the budget deficit increased from three to 3.94 percent of GDP, or about 80 billion dinars (670 million euros).
The deficit increased despite a significantly higher growth of budget revenues than was planned in the original budget.
Budget revenues have increased by as much as 13 percent, and the main reason for this increase is high inflation in the previous year.
On the other hand, budget expenditures increased by 271 billion dinars or by almost 16 percent.
Finance Minister Siniša Mali said yesterday that the increase in the deficit due to electricity and gas imports was agreed with the IMF, as well as that the state has 300 billion dinars in its account.
Current expenditures have increased by almost nine percent, thus less than inflation, but the real reason for the increase in the deficit is to cover the losses of energy companies, EPS and Srbijagas due to energy imports.
Namely, behind the item “Expenditures for the acquisition of financial assets”, which was increased by more than 1,000 percent compared to the plan from the budget to 153 billion dinars or 1.3 billion euros, there are mostly “intervention funds given to overcome the energy crisis” as it is described in the rebalancing proposal.
Subsidies also had a significant increase in the rebalance, by almost 22 percent or 31 billion dinars.
As stated in the explanation of the rebalance, the main reason for the increase in these expenditures is the increased allocation for road maintenance, for incentives to agriculture, railway traffic, investments in mining, tourist vouchers…
More than a third of subsidies were intended for agriculture, 18 percent for road traffic, 10 percent for railways, and 11.25 percent of total subsidies for subsidies in the economy.
For capital investments, the allowance was increased from 407 to 423 billion dinars. This money is mainly intended for infrastructure projects such as the Belgrade-Stara Pazova and Novi Sad-border with Hungary, the construction of the sections Preljina-Požega and Novi Beograd-Surčin, the construction of the Belgrade ring road, the road Požarevac-Golubac, but let’s say the game “Take the account” as a prize and win”.
There is also a large increase in spending within the item “Other current expenses”, by 35.69 billion dinars. These 300 million euros are primarily related to mitigating the consequences of covid-19, but from here, aid to young people, money for elections, as well as payments based on lost disputes before the courts were also paid.
Expenditures for social protection increased by 15.7 billion dinars, mainly for the payment of child support.
The largest expenditures in the budget are for salaries and they were increased by 1.7 percent or 6.3 billion dinars. This is not a consequence of salary growth, on the contrary, they have actually decreased, but of greater employment in the public sector.
On the expenditure side, inflation led to an increase in expenditures for goods and services by nine percent or 14.3 billion dinars.
Thanks primarily to inflation, almost 193 billion dinars more than planned in the original budget will flow into the budget this year. From 1,516 billion, it is planned to increase the income to 1,709 billion dinars.
Tax revenues will be higher by 13 percent. The highest percentage increase will be recorded in the profit tax of as much as 41 percent or 54 billion dinars.
In the explanation, the main reason for such a correction is prudence when planning the budget at the end of last year.
However, the largest nominal contribution came from the most generous tax – VAT. It was increased by 13.6 percent and 93 billion dinars.
The most significant reason for the increase is the higher-than-expected nominal growth of private consumption. Real growth is within the framework of the plan, but inflation contributed to nominal growth.
Economist Saša Đogović says that the expected transfer of losses of public energy companies to the budget and an increase in the deficit are expected.
“It was expected because we are hostages of the partitocratic management of the state, resources and those public enterprises.
The consequences are that the energy company makes extra losses instead of extra profit. This is transferred to the budget, that is, to the citizens of Serbia”, notes Đogović.
He points out that the rebalancing also covers various payments, such as payments to young people three times this year.
“It’s bribing people.” Most often, it is done with pensioners, and now we have it with young people as well. All under the pretext of preventing emigration, but in fact young people should be enabled to be able to get a job with their skills and knowledge, and not to be obedient, which is now the main argument for a certain position”, he notes, adding that at the moment when it is necessary to save and to help the vulnerable, they throw away money.
This is particularly dangerous, he says, because interest rates on borrowing are rising.
“That’s why we’re entering into an arrangement with the IMF and the World Bank, but I think we’ll have to borrow on the market as well”, notes Đogović, Danas writes.
