Fiscal Council: Public debt stops growing in 2016

A sharp decline in fiscal deficit, as a result of better payment collection and austerity measures, has started to yield results this year. External shocks and unreformed public enterprises remain the biggest threat.

The Serbian Public Debt Administration is going to offer 10-billion-Dinars-worth of treasury bills for sale by the end of September. The exact timeline as to how much the state plans to borrow in the last quarter of this year is still not known. This year’s budget stipulates a domestic revenue of 450 billion Dinars and foreign revenue of another 122.5 billion Dinars from the sale of government securities. Although Serbia’s public debt did exceed 24 billion EUR (72.5% of the GDP), the Fiscal Council estimates that the debt would stop growing this year.

“A sharp decline in fiscal deficit this year will stop the public debt from growing which, at the end of 2016, is probably going to stand at between 76% and 77% of the GDP. This is a drop compared to 2015 when it stood at 77.3% of the GDP”, the Fiscal Council says in its analysis. “Owing to a strong growth in the collected public revenue, the fiscal deficit in 2016 is probably going to be 50% lower than the planned 4% of the national GDP and will be more in the region of 2%. With the deficit standing at 2% of the national GDP or just slightly above that, there will be an opportunity to stop the uncontrolled growth of Serbia’s public debt which started back at the onset of the global financial crisis in 2008.”

The Fiscal Council points out that a solid growth of the national GDP, which is estimated to stand at around 2.5% instead of earlier forecasted 1.8%, could prove to be a positive influence on the country’s relative debt this year. On the other hand, a slight depreciation of Dinar against Dollar and Euro in the first seven months of this year could increase the public debt just like partially compensating the deposits that the state has already spent.

“In the next few months, we expect EPS to start using an EBRD loan in the amount of 200 million EUR, with the Serbian state as a guarantor, and which will be spent on the company’s financial restructuring. This means that the state’s indirect financial obligations will increase” – the Fiscal Council states in its analysis.

(Vecernje Novosti, 19.09.2016)

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