The Chairman of the Fiscal Council, Pavle Petrovic said today that it is good that the state deficit is small and that the proposed budget for 2019 was balanced with approximately equal expenditures and revenues.
However, Petrovic is critical of the fact that more budget funds in 2019 will be spent on procuring police and army equipment and increasing civil servant salaries than on building motorways.
“By doing so, the government has made a conscious choice to reduce economic growth”, Pavlovic believes and adds that the government is supposed to increase budget allocations for capital investments in infrastructure and environmental protection in 2019.
The small deficit, he says, will lead to a further reduction of public debt from the current 54 per cent of the national GDP to around 51.5 per cent at the end of 2019.
Want to open a company in Serbia? Click here!
The Fiscal Council believes that next year’s planned increase in public sector salaries is higher than it is economically justified, and so, according to Petrovic, if the average net salary in the public sector is nine per cent, that is twice as much as the salaries in the private sector.
“We are witnessing an ad hoc increase in public sector salaries of between 7 to 12 per cent, instead of systemically implementing payroll brackets, an idea that has unfortunately been abandoned”, Petrovic said.
He also said that the government decided to reduce the tax burden on salaries from 63 to 62 per cent, despite the Fiscal Council proposing 60 per cent.
He points out that the basic deficiency of the budget is the lack of investments, which, according to him, undermines the foundation of future growth.
Petrovic also underlines that the quality of the road infrastructure in Serbia is said to be 20% and the railways 40% worse than in the region.
“The impression is that we have many motorways, but, in reality, we have one third less than Croatia, Slovenia and Hungary. Railways are not electrified and the average speed of trains is below 60 kilometres per hour”, Petrovic said, adding that investments are the right way to stimulate economic growth.
He warned that Serbia was very late with investments in environmental protection, and is one of the most polluted countries in Europe.
The key problem, says Petrovic, is a low economic growth, which is 50% lower than in the countries of Central and Eastern Europe.
This post is also available in: Italiano