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This year’s new budget rebalancing proposed by the Government of Serbia shows that the health crisis has hit the budget much more than expected, due to unresolved issues from the previous period, so it will be a challenge to get public finances back under control, the Fiscal Council evaluated today.
“One of the main objections to the proposed rebalancing is the expressed lack of transparency of public spending, which has increased even more compared to previous budgets,” said the Fiscal Council in the analysis of the budget revision proposal, which will be debated tomorrow in the Serbian Parliament.
The rebalancing foresees a deficit of the republic budget of 483 billion dinars (8.8 percent of GDP), while a deficit of 492 billion dinars (8.9 percent of GDP) is anticipated at the level of the general government.
“This is by far the largest fiscal deficit in Serbia since the data was released and is approximately 40 percent higher than the largest deficits so far in 2012 and 2014. Furthermore, a comparative analysis shows that Serbia’s deficit by 2020 “Be among the largest in Southeast Europe (where it will average 7.5 percent of GDP)”, according to an analysis by the Fiscal Council.
It is added that such an increase in the budget deficit cannot be explained solely by the impact of the fall in GDP on public revenues and the direct cost of the anti-crisis measures implemented.
“A good part of the deficit in 2020 was actually caused by the health crisis that exposed problems that have been hidden under the rug for many years. Long-term underinvestment in healthcare has led Serbia to have to allocate significantly more budgetary funds in the current crisis to comparable countries for the acquisition of the necessary equipment and improvement of the health infrastructure ”, stated the Fiscal Council.
The analysis of this independent body also affirms that the problems of state and public companies (Air Serbia, EPS) are not from yesterday and that “the crisis was actually only a trigger for state intervention that in 2020 covered part of the costs of his failed business – which probably happened at some point and there was no crisis. ”
“Also, the year will end with unsustainably high expenditures for public sector employee salaries, because they increased excessively in 2020 (about 10 percent), and GDP will most likely have a real decline of about 1.5 percent. ” is the assessment of the Fiscal Council.
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