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Photo: EPA / DAS LOOn Wednesday (November 25), epidemiologist Predrag Kon said the situation was “very critical, in some places catastrophic” and that the state was slow to introduce stricter measures.
Kon states that the so-called medical part of the Crisis Staff demanded three weeks ago that all facilities except the supermarket be closed at 5 in the afternoon, but that this was not accepted because “there is a serious economic argument.”
On Thursday, however, the Serbian government tightened its measures a bit. Therefore, high school students and older elementary school students will switch to online classes starting Monday. Regarding restaurants and retail, the measures have only been extended until December 15: restaurants, cafes, betting houses and shopping centers open until 6:00 p.m. and shops until 9:00 p.m.
Despite the fact that doctors have been demanding a more significant tightening of measures to reduce the number of infected and sick for several weeks, the non-medical part of the crisis personnel, the politicians, still do not allow it.
State President Aleksandar Vučić said something similar on November 12, when he said that he was “concerned about people’s lives, but we have to protect the economy, we have to pay salaries and pensions.”
Money from a helicopter
If we go back to the measures of the beginning of the epidemic – several months of curfew with complete traffic bans for 2-3 days – we will remember that the state supported the “preservation of the economy” with a whole series of measures to help the economy and citizens.
From the budget, three minimums were paid to workers and then two more times 60 percent of the minimum to employees of all companies that requested help. Each adult citizen who applied was paid 100 euros, as well as a one-time grant of 4,000 dinars to all pensioners.
In a frequently quoted program since the end of March, President Vučić explained on TV Prva that “we managed to find more money”, announcing the so-called helicopter money, as the distribution of money to everyone, regardless of income and social status is called. .
Now, when the number of infected and dead is much higher than during the state of emergency, the state is delaying the introduction of the strictest measures because it “protects the economy.”
The question arises as to whether the state could not have spent that much money during the first coronavirus outbreak. If spending were smarter, would there be more money now to tighten up measures in a timely manner while supporting vulnerable parts of the economy?
Economist Goran Radosavljevic, a professor at the Faculty of Economics, Finance and Administration (FEFA) and an official with the opposition Social Democratic Party of Serbia (SDS), says that the state could now have 750 million euros more in its account without problems.
“We certainly didn’t have to spend 600 million euros at the rate of 100 euros for everyone. Also, in the second round, we didn’t have to help everyone. It was already known in May and June when the crisis hit the hardest. Why was the money given to large companies that had an increase in turnover throughout the period? ”Radosavljević asked in an interview for DW.
“I think that of the 300 million euros from the second round of aid, at least half was spent unnecessarily on aid to companies that were not in danger,” says Radosavljevic.
Contradictory opinions
Even the Fiscal Council, as an independent state body, has repeatedly criticized the distribution of 100 euros, pointing out that the state “irrationally borrowed” for that measure, and that there are no more resources available for a strong new intervention.
Ivan Nikolic, a member of the Board of Governors of the National Bank of Serbia, however, says that the current situation of the economy shows that the measures were measured and produced a good result, as well as that there is not much reason to criticize the measures.
“Based on official data, it would hardly be possible to significantly object to the package that the state separated.” I would not highlight a measure of 100 euros, nor is it possible to partially estimate the overall effects, so just look at a segment of the aid and say that this it was good and this was bad, “Nikolic told DW.
“If we look at where we are at the moment, what is the activity in the economy, or at least the perception of citizens and the economy in terms of demand, then it is very difficult to criticize the general measures, and even those individual segments,” he added .
However, economist Mihailo Gajić of the libertarian club LIBEK notices a disproportion between better economic performance and the funds invested. “Why were our programs more expensive and less efficient?” “Mainly because they weren’t selective, it was given to those who needed it and to those who didn’t need it,” he told DW.
Gajic says that for the first package of measures, the government can still be taken as an extenuating circumstance that the aid was paid urgently and that there was no time for detailed analysis. “But that does not absolve the government of guilt for the second package of measures; until then there was enough time to apply a different, more selective model, and not to repeat the same solution as three months earlier.”
Record deficit, record layoffs still?
Due to the pandemic and the measures, the country’s fiscal deficit will amount to 483 billion dinars by the end of the year, instead of the 20 billion expected. That will be a record deficit of 8.8 percent of GDP. Due to indebtedness, it is estimated that the public debt will exceed 60% of GDP, which the Fiscal Council estimates as unsustainable.
The state of public debt in relation to GDP will also depend on economic growth during 2021, and forecasts of this growth differ significantly: according to the new Fiscal Strategy, the Serbian economy will grow by six percent in 2021, while the World Bank forecasts half. The IMF forecast is closer to that of Serbia: growth of 5.5 percent, but the IMF predicts a 2.5 percent decline this year, while national institutions expect a smaller drop of up to 1, 5 percent.
The Fiscal Council warns of this: “If the government projects public revenue and indexes public spending in 2021 based on overly optimistic economic recovery projections, and then such forecasts do not come true, Serbia could easily find itself in big fiscal trouble. “.
On the other hand, another of the biggest risks that awaits the national economy comes after the New Year: then the ban on laying off workers for companies that have received state aid expires. The condition for taking the state minimum wage was that the company should not lay off more than ten percent of the employees three months after the last payment.
This allowed the companies to fire workers who did not have an employment contract, that is, who worked illegally, in temporary-occasional jobs, with an employment contract, without consequences). At the same time, a “safety net” was established to prevent mass layoffs.
And that safety net will be removed in early 2021.
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