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RSD 662.2 billion to cover deficit and debts – What does the proposed budget for 2014 bring?
Thursday, 07.11.2013.
15:31
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In 2014, Serbia is planning to set aside some RSD 662, 2 billion, which is a bit more than EUR 5, 75 billion, from foreign and local sources to fund the budget deficit, to procure financial assets and pay principal amount of debts to local and foreign creditors, EUR 3 billion of which the government expects to secure only from the Government of the United Arab Emirates.
As the Proposal of the Law on budget 2014 implies, the funds totaling RSD 264 billion the most, will be provided from the loans of local and foreign financial commercial and multilateral institutions and foreign governments, while the emission of state-owned securities will provide RSD 330 billion the most, and issuance of euro bonds will provide RSD some 68, 5 billion the most.
The planned income based on state indebtedness at foreign and local market will be higher for some RSD 103, 9 billion than the planned deficit (some RSD 182 billion), debt repayment and procurement of financial assets, which is a positive change on the account balance.
In 2014, Serbia will approve project and program loans up to RSD 585, 6 billion. This comprises the World Bank loan totaling RSD 72, 2 billion (some USD 790) and five different loans are planned.
The loan for public companies development and reconstruction totaling some USD 250 mil is planned as well as USD 20 mil for the Agency for deposit insurance capital increase, some USD 40 mil for health sector and some USD 50 mil for development of land administration in Serbia.
In 2014, approval of the loan from the Bank for Council of Europe development totaling some EUR 35 mil was planned for funding the projects of new prison capacities construction in Kragujevac and Pancevo.
Then, in 2014, a loan from the Government of the United Arab Emirates for the support to the Republic of Serbia and totaling EUR 3 billion was planned as well as the loan from the Fund for Abu Dhabi development, totaling USD 275 mi for the support to the projects in agriculture. A loan from the Government of Turkey totaling some USD 40 for funding the projects in the field of road infrastructure and less developed municipalities was also planned.
During the year, the Republic of Serbia, as anticipated in the Proposal of the Law on budget 2014, will issue state-owned bonds at the international financial market totaling USD 750 mil for the current budget funding.
In the following year, the plan is also to provide a loan from the Chinese Export-import bank totaling some USD 608, 2 mil of which for the implementation of the second stage of the Package of projects Thermal power plants Kostolac, where the construction of the new energy block at the Drmno location is planned as well as the mine capacity expansion.
In 2014, the Republic of Serbia will issue guarantees for foreign loans totaling EUR 787 mil to the European Bank for Reconstruction and Development (EBRD) for stand by line to the Agency for deposit insurance totaling EUR 200 mil, to the German Development Bank (KfW) for the loan of EUR 45 mil which will enable the Electric Power Industry of Serbia to fund the replacement of the system for ash and slag transport.
Serbia will provide guarantees for loans form business banks totaling EUR 491 mil, 2
EUR 200 mil for maintaining current liquidity of Srbijagas, EUR 36 mil for transfer from analogue to digital signal public company Emisiona tehnika i veze.
For maintenance of current activities of the public company the Electric Power Industry of Serbia, issuance of state-owned guarantees for the loan of EUR 100 mil with business banks has been planned, for the loans of EUR 100 mil for maintenance current liquidity in Zelezara Smederevo as well as issuance of state-owned guarantees for the loan of EUR 125 mil as a support to modernization, technology development and export of specialized industry.
It was planned to issue state-owned guarantees to Zeleznice Srbije for the loan of EUR 51 mil from the Czech export bank for the infrastructure projects at the Nis-Dimitrovgrad rail.
A total of RSD 3 billion for Corridor 11, works to start in early 2014
The Minister of construction, Velimir Ilic, explained that the proposal of the budget provides participation of Serbia with some RSD 3 billion, for the construction of the part of Corridor 11 funded through the Chinese loan and announced the works will start early next year the latest.
According to the forecast, in 2014, the Ministry of construction and city planning will be entitled to RSD 4, 2 billion compared to RSD 1,58 billion this year, as the budget re-balance suggests.
What do economists say?
An economist and a member of the Fiscal Council, Vladimir Vuckovic, estimated yesterday that the indebtedness of the state planned for the next year is high but that it cannot decrease significantly to a short-term, Tanjug reports.
- Indebtedness was set aside through planned deficit for the next year and repay of earlier debts – Vuckovic said at the presentation of thenewsletter "Macroeconomic analysis and trends", published by the Economic Institute.
He said that the funding structure is important and that the budget proposal shows that the tendency will move to bilateral loans while indebtedness at the international market will decrease.
- It would be good to succeed in it because bilateral indebtedness is cheaper and more favorable so the interest rates, especially in crisis years, will be lower – he said.
An economist, Miladin Kovacevic, estimated that the proposed budget for 2014 is in line with fiscal consolidation and that it is not risky as well as that it is in line with the social role of the state.
- The new budget is at the line of fiscal consolidation and economic measures effects announced a month ago – Kovacevic said at the presentation of the Macro- economical analysis and trends.
As he estimated, the budget is a decisive step towards consolidation and on the other hand it pays attention to social functions of the state as well. According to him, the strategy of reforms should be supplemented for the period 2015-2017.
Kovacevic thinks that decrease in taxes on labor would generate a huge hole in a budget which could not be compensated through the existing tax instruments or savings measures. In order to boost unemployment, as Kovacevic estimates, it is not enough to decrease labor taxes but a wider package of measures is required.
The economist, Stojan Stamenkovic, thinks that the problem is that the growth of economic activities is planned with constant reduction of salaries and consumption.
- Can consumption decrease four years in a row while economy activities speed u? – Stamenkovic asked.
Ministarstvo finansija Republike Srbije
Vlada Republike Srbije
Eksimbanka a.d. Beograd - privredno društvo brisano iz registra
The Export-Import Bank of China
Svetska Banka-WB Beograd
Agencija za osiguranje depozita Beograd
EBRD ASB Serbia
EBRD London
Council of Europe- Savet Evrope
Republic of Turkey Ministry of Foreign Affairs ANKARA
KfW Bankengruppe Frankfurt am Main
KfW kancelarija Beograd
Elektroprivreda Srbije ad Beograd
Emisiona tehnika i veze Beograd
JP Srbijagas Novi Sad
Železara Smederevo d.o.o.
Železnice Srbije a.d. Beograd
Ministarstvo građevinarstva, saobraćaja i infrastrukture Republike Srbije
CEB, Čepka Republika
Fiskalni savet Republike Srbije
Ekonomski Institut a.d. Beograd