Economists say there’s no money in the state budget for higher pensions and salaries

According to most economists in Serbia’s, there will be no money in the 2021 state budget for higher civil servant salaries and pensions, as stated by the Serbian President.

“The announcement by the President of Serbia, Aleksandar Vučić, that there might be a possibility of salary increases in the public sector has been given exclusively for political purposes,” said Goran Radosavljević, professor at the Faculty of Economics, Finance and Administration (FEFA).

Vučić said that Serbia will fight the health crisis better than all other European countries and that if stability is maintained until the end of the year, there will be an increase in salaries in the public sector.

Radosavljević recalled that Vučić had stated a few months ago that Serbia did not need EU money, so only a month later the state borrowed about 2.5 billion euro abroad.

He added that we should be reserved when talking about an increase in salaries because this depends on the duration of the health crisis due to the pandemic.

“Expenditures in the state budget should not be increased. Tax revenues have decreased by 2% since the beginning of the year, which is not little,” said Radosavljevič adding “there is nothing” of the expected budget surplus, but after five months this year, there is a significant deficit.

This, he said, is not unusual in a crisis, which is why one must be careful when taking out too many loans.

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Economist Milan Kovačević also told the Beta agency that there is no money in the state coffers to increase salaries and pensions in the coming year, because the budget has already suffered a deficit and the state has taken out big loans.

“If the Serbian government plans to continue borrowing money because of rising wages and pensions, it will make our future even more difficult,” said Kovacevic.

He also pointed out that “certain wrong measures, contained in the state’s assistance package for businesses (to mitigate the consequences of the pandemic) will make the future more difficult; for example, a total of EUR 620 million has been disbursed as a one-off payment to each Serbian citizen over the age of 18. The government now needs to pay EUR 100 million in interest alone on this borrowed money.”

“The three-month-moratorium on payment of loans granted to businesses and citizens, as it turned out, was not a good measure because it will make loans more expensive and the pandemic has not yet calmed down as we thought, but the situation is actually more difficult than at first. Now, the time has come to start paying those deferred loans,” said the expert.

 Kovačević also notes that “Vučić is constantly talking about economic growth in the first quarter, while growth was recorded only in the first two months, i.e. until the beginning of the epidemic” and it is a nonsense statement that Serbia will overcome the crisis more easily than other European countries because it has a lower living standard than others.

“The Serbian government has forecast economic growth of 4% this year, but it is likely to decrease by 8% as in other countries, while Serbia should grow faster than the others to reduce the lag in relation to them,” the economist concluded.

(N1, 13.07.2020)



This post is also available in: Italiano

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