Serbia's republican budget posts EUR 682mn deficit in Jan-May.

By bne IntelliNews June 8, 2012
Serbia's republican budget posted a deficit of RSD 78.9bn (EUR 682mn) in the first five months of the year, the finance ministry said on its website on June 7 but provided no year-ago comparative figures. The Jan-May deficit is equal to 2.22% of the projected full-year GDP. Jan-May budget revenue stood at RSD 286bn, including RSD 265bn tax revenue, while expenditures totalled almost RSD 365bn. In May alone, the fiscal gap stood at RSD 5.8bn versus April's RSD 24.6bn as budget expenditure fell by a monthly 23% to RSD 67bn, while revenue dropped by a minor 2.2% in comparison with April to RSD 61bn in the fifth month of the year. Serbia's consolidated budget, which apart from the republican includes the budgets of the local governance and the social security agencies, posted a RSD 78.1bn deficit for January-April 2012, the ministry said in a separate statement. It publishes consolidated figures with a month delay after the republic data. The government's 2012 budget bill targets a deficit of 4.25% of GDP. Yet, the 1.5% economic growth forecast in the bill has already been downgraded to 0.5% by the central bank and the IMF so the budget will have to be adjusted accordingly. The revision, however, is waiting the formation of the country's new government following the May 6 elections. The rising spending envisaged by this year's budget bill resulted in the IMF freezing its EUR 1.1bn precautionary deal with Serbia earlier in 2012. The new government will also have to renew talks on unblocking the vital agreement with the Fund. Serbia's fiscal council warned at end-May that the country is heading towards debt crisis, triggered by the rising beyond forecast fiscal deficit. The council, which is elected by the parliament and is legally obliged to provide an independent assessment of the government's economic policy, warned that the 2012 consolidated fiscal gap will be much bigger than the projected RSD 152bn since already in the first quarter it was around RSD 30bn above plan. If no measures are taken, this difference might bulge to some RSD 50-60bn, pushing the deficit beyond RSD 200bn. In this case, the public debt would reach 55% of GDP at end-2012 after already breaching the legal limit of 45%-of-GDP at the end of last year. Furthermore, this year's GDP would instead of rising 1.5% as planned most likely stagnate or even shrink in case the eurozone crisis worsens, the council said.

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