VAT may increase by three to four percent in Serbia in case savings measures do not produce the expected effects, economic experts said on Thursday.
The Serbian government announced only the 2015 savings programme with plans for budget deficit reduction by EUR 700 million, professor of the Belgrade Faculty of Economics Milojko Arsic said.
Lasting structural savings in 2015 are very limited in scope and total some EUR 500 to 550 million, Arsic said at the presentation of the latest edition of the Quarterly Monitor economic magazine.
The main weakness of the government plan is that it relies on temporary measures, such as public enterprise revenues, which were adopted because the savings from the forthcoming cuts in public sector salaries and pensions would be very small, he said.
Without a credible programme, it will be more difficult to fund the fiscal deficit and maintain a stable exchange rate, and private investments will not be sufficient to bring about economic growth, Arsic said and added that this is the reason why the government has to put forth a proposition concerning additional long-term savings measures in 2015 and present a binding savings plan for 2016 and 2017, Arsic noted.
Nikola Altiparmakov of the Fiscal Council also said that the alternative to pension and salary cuts would be embodied in a VAT increase if the former prove lower than needed.
Speaking about the interruption of public debt increase, Altiparmakov said that EUR 2 billion need to be saved up in the next three years so as to preserve the public debt at the level of 80 percent of the GD.
Source SerbGov
