FISCAL COUNCIL: Deficit in 2014 total RSD 300 billion

Budget rebalance shows the real deficit in 2014 will be RSD 300 m, instead of 225 billion as planned with rebalance, it was stated in the estimation Fiscal Council provided upon adoption of the rebalance and the suggested salary cut model is positively estimated.

Pension cuts model, according to their opinion, implies severe pension cut progressiveness for which realistically low savings are generated wherefore the Fiscal Council thinks it is not optimal.

The Fiscal Council estimates the budget rebalance does not comprise all costs Serbia has due to bad business operations of public and state-owned companies and banks as well as some expenditures funded through project loans.

- If all expenditures were comprised within the budget rebalance, deficit of the Republic would exceed RSD 300 billion – it was estimated in the report of the Fiscal Council.

The Fiscal Council outlined it can be very dangerous that expenditures for different subsides increased. They point out that, even the state owns to banks some eight billion dinars for implemented subsidies for liquidity loans as well as RSD 1,6 m of debts to recycling, the debt was initially comprised within the budget 2014 and now it showed up as additional expenditure in the budget.

The report shows governmental expenditures for paying penalties with the rebalance increase for more than five billion dinars.

The Fiscal Council positively estimates the suggested model for salary cuts and says that cut decrease of ten percent leads to significant fiscal savings, it does not increase unfairness in the existing salary system in public sector, it is all applicable since it comprises public companies

It was mentioned that healthier situation in public finance in the next three years requires decrease in fiscal deficit for at least EUR 1,6 billion which implies savings of almost two billion euros since some expenditures in the following period will increase. They outline that budget rebalance for 2014 is the first step in a three-year fiscal consolidation program.