Chief economist of the Fiscal Council: Serbia’s debt this year jumps to 41.9 billion euros
Serbia is forced to borrow again in 2025 due to the deficit in the budget, and this year alone it will have to pay 1.9 billion euros, says the chief economist of the Fiscal Council, Danko Brčerević.
Such a large interest expense, as he said, could have been avoided, even though Serbia’s economy can bear it, if better economic choices had been made in previous years, instead of distributing money without any criteria to all adult citizens, pensioners, young people, children, and the huge losses of poorly managed public energy companies were also covered from the budget.
“For all that, the state borrowed under unfavorable conditions and now we are paying for such policies,” said Brčerević in an interview with the Beta agency.
Brčerević said that increasing the budget deficit to three percent of the gross domestic product (GDP) in 2025 is not yet dangerous, although the fiscal policy has taken a turn in the wrong direction.
From 2024, as he stated, new “wasteful” policies and multi-year projects such as Expo are being introduced, which cost more than originally planned, so they structurally changed the budget and raised the deficit to a relatively high level of three percent of GDP.
“That’s why the general fiscal rules had to be suspended, which predicted a deficit of 1.5 percent of GDP in 2025. The budget with a three percent deficit is becoming strained, so some important projects, such as the metro, are being postponed. There is not much room left for new policies that are being announced, especially since there is also the International Monetary Fund with which Serbia has an arrangement and which will hardly allow a greater deviation from the agreed fiscal policy,” said Brčerević.
He pointed out that the budget deficit must be financed by new borrowing of the country, so the Government of Serbia projected that the public debt will increase during 2025 from 39.3 billion euros to 41.9 billion euros.
As he said, relatively large interest expenses will be paid on this new debt, because borrowing conditions are still unfavorable.
Studies of the justification of the National Stadium and Expo?!
“The economy can handle it and there will be no risk of a fiscal crisis, but the main question is whether these costs are justified and whether the economy will have long-term benefits from Expo or the National Stadium that would justify this new debt,” Brčerević said.
He added that the Government of Serbia should finally show justification studies for those and all other projects because taxpayers have the right to know what their money is being invested in.
Answering the question of whether demands for salary and pension increases will increase, Brčerević said that the increase in pensions in Serbia is legally precisely defined, in an economically sound way, and that the increase in wages in the public sector has a legal limit that prevents the total cost of wages in to the budget grows faster than the ability of the economy to finance them.
“Deviating from these rules would lead to chaos and crisis, so the Government of Serbia should not make improvisations in this field,” said Brčerević.
According to him, it is important that the Government of Serbia finally better and more objectively regulates the system of earnings and employment in the country in various areas – health, education, MUP, army, administration.
“This reform has been announced since 2013, but we stumbled, already at the first step, in counting employees in the public sector,” said Brčerević.
Source: Beta
Photo: Pixabay, Beta, screenshot
Source: bizlife.rs
