In three years the state paid foreign investors EUR 230mln in subsidies and incentives

Since 2016, the state has subsidized 82 projects and allocated 230 million euro for investors for this purpose. As a result, a total of 35,889 new jobs have been or will be created, which means that each new job is subsidized with slightly over EUR 6,400.

Ten years ago, the former Economy Minister, Mladjan Dinkic calculated EUR 1 in incentives paid out to foreign investors returns EUR 8 in state budget revenue. The former Agency for Foreign Investments and Export Promotion, which subsidized new jobs and paid out EUR 2,000 to 10,000 for each new employee from the state budget, said the same.

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The Ministry of Economy claims that subsidizing foreign investors is primarily an economic category. According to the estimates, this is validated by analyzing the effects from several different angles, both through collected taxes and contributions to public revenues through to the creation of new jobs and disbursed salaries, engagement of domestic companies as suppliers, export increase, etc.

The Ministry also specifies that, from 2016 to mid-May 2019, 82 investment projects were subsidized by the state, with almost EUR 230 million paid out in subsidies, and 35,889 getting a new job.

On the other hand, economists argue that a thorough analysis of the impact of government incentives on business is needed for a proper assessment of the effects of subsidies in which sectoral experts and business community, in addition to the government, should participate. Professor at the Faculty of Economics in Belgrade, Ljubodrag Savic says that it is necessary to form an expert team that will take into account all factors.

He also notes that it is very difficult to measure the effects in cases when investors terminated contracts and left the country.

The Fiscal Council recently estimated that subsidies for investors are growing and that the government is increasingly reliant on this non-market measure as a way to boost investments, arguing that this should not be a substitute for the reform of the economic environment.

“The value of allocated subsidies in the period from 2012 to 2015 stood at 10 billion dinars, which subsequently grew to around 12.5 billion dinars in 2017 and 2018 respectively, while the subsidy allocation plan for 2019 stipulates the amount of about 15 billion dinars,” Professor Savic said. The Fiscal Council has recommended that subsidies should be reduced after the expiration of the planned three-year period, that is, from 2021.

In 2016, the state-subsidized companies invested a total of EUR 216 million and planned to create 15,034 new jobs. The subsidies in 2016 amounted to EUR 81.48 million. During 2017, the planned level of investments was EUR 148.94 million, with the creation of 6,990 new jobs and allocated incentives of EUR 43.69 million. In 2018, the investments amounted to EUR 209.54 million, with the planned employment of 7,846 people and approved subsidies in the amount of EUR 63.23 million.

By mid-May this year, the Ministry of Economy recorded investments in the amount of EUR 238.66 million, with the planned employment of 6,019 people and approved incentives in the amount of EUR 41.52 million.

(Blic, 18.06.2019)

This post is also available in: Italiano

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