Serbia's parliament endorsed on December 13 the 2014 budget bill targeting a state budget deficit of RSD 182.5bn (EUR 1.6bn) or 4.6% of the full-year GDP forecast, news agency Tanjug reported. The bill was supported by 134 MPs, 40 voted against. The total budget deficit including the payment of activated state guarantees and spending on saving troubled banks and companies is set at 7.1% of GDP in 2014, finance minister Lazar Krstic has said earlier.
Budget revenues for next year are projected at RSD 930bn, up 6.5% compared to the revised 2013 budget. VAT proceeds are seen at RSD 430bn, accounting for 46% of total income. Budget expenditures are likewise forecast to increase by 5.8% to RSD 1,113bn, out of which nearly 50% will go for social insurance (RSD 280bn) and employees expenses (RSD 272bn). Capital spending in 2014 will amount to RSD 52bn and will mainly finance irrigation in agriculture, refurbishment of clinical centres, research and development in the field of science. Interest payments will total RSD 114bn, up 21% y/y.
The budget assumes a 1% economic growth in 2014, slower than the 2% expansion expected for 2013 on subdued investment activity and falling private and public consumption.
Serbia needs to implement additional savings in 2014 worth around EUR 300mn or 0.8-1.0pps of GDP in order to curb its rising budget gap and put the public debt on a sustainable footing, the country’s fiscal council said at end-November. The council is elected by the parliament and is legally obliged to provide an independent assessment of the government's economic policy. It noted that the planned total deficit of 7.1% of GDP next year is too high and is among the highest in the CEE region.
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