Q:
A:
New government measures to fight crisis
Belgrade,
5 May 2009
Minister of Finance Diana Dragutinovic stated in an interview for today’s edition of the Vecernje Novosti daily that the new government measures against the crisis are sufficient, but added there is a back up plan in case the situation worsens.
File photo of Diana Dragutinovic
Author:
Tanjug
The official government website gives excerpts from the interview.
The back up plan:
We have a back up plan and it is part of the programme with the IMF. If necessary, we will further reduce our expenses, as well as try to improve tax collection, especially for VAT, where attempts at tax evasion are the greatest. There are many options and I do not exclude an increase in VAT, however, it will be our last option.
Why did the savings measures reflect most on employees in public administration?
Our goal was to control the number of employees in the public sector. If this savings measure is insufficient, we will ask others to make concessions as well. We have estimated these savings to be around RSD 600–800 million, which will enable the formation of a special fund for putting out possible social fires, which are not easy to predict.
Budget revision envisages higher funds for pensions:
In order to maintain pensions at the current level, the revision envisaged increases to the pension fund of around RSD 25 billion.
Higher excise tax on fuel:
The increase is moderate and in line with the prevailing prices in the region. Slower economic activity,as well as a fall in consumption, has caused a fall in total public revenues. The growth of the excise tax revenue is less than expected because of the fall in consumption.
Electricity price increase:
It will depend on the inflation rate, economic activities etc.
Is the government re-considering the unilateral implementation of the Trade Agreement with the EU due to extremely low customs tax income?
No, it isn’t because customs tax in Serbia is really high and too much protection does the country more harm than good. The loss on customs tax in the first two months of the Trade Agreement’s implementation stands at €10.7 million, but Serbia imported raw materials under more favourable conditions.
The announced new loans:
The budget revision determines the top line for new loans. The amount of the loans we draw, for instance for Corridor 10 and other capital projects, will depend on the dynamics of the works and their realisation. The loans are taken and repaid. Bearing in mind the instalments which are now due, it is clear we could have more loans of that amount and at the same time not increase our debt.
The back up plan:
We have a back up plan and it is part of the programme with the IMF. If necessary, we will further reduce our expenses, as well as try to improve tax collection, especially for VAT, where attempts at tax evasion are the greatest. There are many options and I do not exclude an increase in VAT, however, it will be our last option.
Why did the savings measures reflect most on employees in public administration?
Our goal was to control the number of employees in the public sector. If this savings measure is insufficient, we will ask others to make concessions as well. We have estimated these savings to be around RSD 600–800 million, which will enable the formation of a special fund for putting out possible social fires, which are not easy to predict.
Budget revision envisages higher funds for pensions:
In order to maintain pensions at the current level, the revision envisaged increases to the pension fund of around RSD 25 billion.
Higher excise tax on fuel:
The increase is moderate and in line with the prevailing prices in the region. Slower economic activity,as well as a fall in consumption, has caused a fall in total public revenues. The growth of the excise tax revenue is less than expected because of the fall in consumption.
Electricity price increase:
It will depend on the inflation rate, economic activities etc.
Is the government re-considering the unilateral implementation of the Trade Agreement with the EU due to extremely low customs tax income?
No, it isn’t because customs tax in Serbia is really high and too much protection does the country more harm than good. The loss on customs tax in the first two months of the Trade Agreement’s implementation stands at €10.7 million, but Serbia imported raw materials under more favourable conditions.
The announced new loans:
The budget revision determines the top line for new loans. The amount of the loans we draw, for instance for Corridor 10 and other capital projects, will depend on the dynamics of the works and their realisation. The loans are taken and repaid. Bearing in mind the instalments which are now due, it is clear we could have more loans of that amount and at the same time not increase our debt.
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