Budget Bill for 2013 adopted - Balance between savings and incentives

At its yesterday's session, the Serbian government adopted the Budget Bill for 2013, which envisages revenues of RSD 956.4 billion and expenditures of RSD 1078.3 billion, said Minister of Finance and Economy Mladjan Dinkic.

Speaking at a press conference held after the government session, Dinkic said that the document envisaged the reduction of the budget deficit to 3.3% of the achieved GDP.

The Minister underlined that the budget had been adopted on time, that it supported development and set balance between savings and incentives.

The aim is to cut the budget deficit in half, protect the most vulnerable categories of society and provide development stimuli for the economy, Dinkic underlined, adding that the Serbian parliament should adopt the budget bill before November 20th.

According to him, the state budget bill for 2013 prescribes that Vojvodina should receive 7.05% of total revenues, which is guaranteed by the Law on the Budget System.

Dinkic also announced that representatives of the International Monetary Fund (IMF) would start talks with the Serbian government about a new arrangement within the next two weeks, that is, by November 10th at the latest.

He said that he had had a telephone conversation the day before with Suzana Burgasova, head of the IMF mission that would come to Serbia, who had expressed satisfaction with technical talks held with the Serbian government to date.

He noted that the talks with the IMF would not be continued if Serbia did not have a good budget bill for 2013.

Dinkic underlined that for the first time the IMF believed that the consolidated deficit could be higher than targeted and that it could stand at 4% of GDP.

He specified that the budget envisaged guarantees for the realization of loans of the Chinese Exim Bank for construction of a part of Belgrade-Cacak motorway and sections of the motorway Pojate-Preljina and Novi Sad-Loznica, as well as guarantees for a Russian loan worth $800 million for the modernization of railway infrastructure.

Together with the 2013 Budget Bill, the Serbian parliament will also examine the Bill on limiting payment deadlines, the Minister announced and explained that this law introduced an obligation on part of the state to pay all its liabilities within maximum 45 days from the day of the signing of an agreement, while for companies this deadline will be 60 days.

Dinkic said that that would be the first time that the state would have a shorter deadline for the payment of its obligations than companies, underlining that the state would introduce the concept of personal responsibility of ministers and directors of public companies who would be fined RSD 100,000 per month for failing to respect payment deadlines, while the other sanction would be an interest on arrears.

The planned budget deficit for 2013 is RSD 132.3 billion, while the total deficit of the Republic of Serbia is RSD 121.9 billion, and that is 3.3% of GDP. Revenues at the level of the whole country amount to RSD 1685.2 billion, and expenses are at RSD 1817.5 billion.

The consolidated budget, which apart from the national budget also includes the budget of the province, municipal budgets, the budget of the public road company Putevi Srbije and the organizations of mandatory social insurance, has a deficit of RSD 132.3 billion, which is 3.6% of GDP.

The budget is designed in such a way as to stop the growth of public debt, and the expected economic growth is 2%.

The biggest budget savings have been made in expenditure on subsidies – RSD 7 billion for expenditures for the purchase of goods and services – RSD 4.6 billion, as well as on expenditures for budget loans – RSD 4.1 billion.

At the same time, expenditures for social care have been increased by approximately RSD 7 billion.

Public debt should be increased at the end of this year to almost 60% of GDP, and it will start dropping below that level as of 2014.

In 2014, the government plans to additionally cut the budget deficit to 1.9% and in 2015 to 1% only.