The Fiscal Council has released its assessment of the state budget rebalance in which, according to the Council, the most economically damaging measure is “excessive increase in public administration salaries in the range of between 8 to 15 per cent”.
The Council added that the planned increase is “unfounded in economic growth” and thus “fiscally unsustainable and irresponsible.”
“The effects of that measure are minimal in 2019 because the higher salaries will be paid only in December but will cost the government 12 times more in 2020 and will be a huge and lasting fiscal burden,” a press release said, adding that higher salaries are justified only to the extent of economic growth. In the press release, the Council goes on to say that civil servant salaries have been raised 9 per cent this year while economic growth is expected to stand at between 5 and 5.5 per cent.
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The Council said that a one-off financial bonus in the amount of 5,000 dinars to pensioners was not a good measure because “the social position of the population should not be determined based on their status”. It warned that some 100,000 elderly Serbians do not have pensions and do not qualify for that bonus.
The Council went on to say that the rise in road infrastructure investments in the amount of 13 billion dinars was the most beneficial item in the amended budget but warned that the construction of the Pojate-Preljina motorway, for which the money had already been earmarked, has not started.
The Council said the law converting Swiss franc mortgages into euros caused an unjustified budget expense of 9 billion dinars and added that the increase in the costs relating to the police and military equipment, amounting to 10 billion dinars, was unusually high.
The Council concluded that the government should not lose sight of the fact that the budget will be deprived of another 2 billion dinars in the coming years due to the unpaid profit tax.