Serbian government’s allocations for fines, penalties and related fees pose a growing risk to public finances, the Fiscal Council has said, commenting on the state’s Fiscal Draft Strategy 2020 with Projections for 2023 and 2024.
Based on court verdicts alone, the state has paid over a billion euro, or over 120 billion dinars in the past decade, the Council said.
The Fiscal Draft Strategy, the Council says, includes all penalties only in principle and without quantification, as a risk which is not justified given their level and growing trend.
„Government allocations for fines, penalties and related fees pose a growing risk to public finances. We remind that those payments were only four billion Dinars at the end of 2010, and it grew to about 23 billion Dinars in 2020. There is a danger that this trend could continue in the future,“ the Council said.
The Council believes that more attention must be paid to the risk of increased costs for fines and penalties.
Although this problem could bring high costs to the medium term, the Strategy does not address it appropriately.
„The Strategy plans to reduce the allocation for other current expenditures in the medium term (which includes all penalties), that could easily prove to be an overly optimistic forecast,“ the Council said.
It added that in its Report on the Final Accounts for 2019, the State Audit Institution (SAI) provided a tabular presentation of potential liabilities based on 7,764 lawsuits within 11 ministries, which at the end of 2019 reached at least 59 billion dinars (500 million euro).
„Although this Report does not specifically says that, it is suspected that these are disputes before local courts, not the international ones. That means that the total potential liabilities can probably be drastically higher than this record shows. Given the magnitude of this problem, as well as the fact that some institutions (SAI) have detailed data and publish an overview of budget commitments based on disputes, we believe that there is no obstacle that similar and expanded, tables appear in the Fiscal Strategy,“ the Council added.
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