President of Fiscal Council: Stability of finances not jeopardized, but all debt costs high

There was a heated debate in the National Assembly of Serbia about the budget revision. Blagoje Paunovic, the new president of the Fiscal Council, said for RTS that, in essence, the fiscal and macroeconomic stability of the country would not be jeopardized.

Blagoje Paunovic says that the revenues and expenditures are credibly budgeted, but that the revenues could be bigger than projected.

– According to our estimates, it could be around 0.2% of the GDP, and the same goes for the expenditures, which could be slightly lower. Some of them may not be realized, so our estimate is that they could be slightly lower, by around 0.3 to 0.4% of the GDP – Paunovic said.

Paunovic says that the macroeconomic stability and the fiscal stability are not jeopardized, but advises increased caution.

– There should be increased caution about the fact that, with this budget revision, the fiscal deficit is increased from 2.2% to 2.9% of the GDP, which will have an impact on the reduction of the public debt. The Fiscal Council believes that the opportunity to reduce the country’s public debt even further has been missed – pointed out Paunovic.

The increase of the fiscal deficit to 2.9% of the GDP mostly comes from the increased investments, that is, the expenditures for EXPO, the Rafale aircraft and other capital investments.

That is the kind of policy that the Government, that is, the Ministry of Finance, has been implementing for some time now and which, as they announce, they will not abandon.

The capital investments are currently at an all-time high at 7.9% of the GDP, but the Fiscal Council is skeptical toward it.

– We are only pointing to the need for a greater caution. The fact itself that the capital expenditures of the Republic are very high, at 6.9% of the GDP and even 8%, if capital investments on the general state level are taken into consideration, says that it is truly an all-time high level of public investments in our country – explained Paunovic.

The high level of public investments is made even more pertinent by the problem of an increased transparency of public projects.

– The public should be notified, both experts and the wider public, about those projects. That means that there should be adequate studies behind them, analyses of costs and benefits, because such analyses will primarily contribute to a better selection of projects – said Paunovic.

Fiskalni savet Republike Srbije

Fiscal Council

Blagoje Paunović

budget revision

capital investments