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The Government of the Republic of Serbia

In the service of citizens

Bill on budget 2007 to be forwarded to parliament by December 1

Belgrade, 22 November 2006

Serbian Minister of International Economic Relations and coordinator in the Ministry of Finance Milan Parivodic said today that the Serbian government will forward the bill on the budget for 2007 to Serbian parliament by December 1.

Milan Parivodic at today's press conference

Author: Fonet

Parivodic told a press conference that if parliament does not adopt the bill by December 15, the government will bring a decision on temporary financing in the period from January 1 to March 31 next year.

He explained that temporary financing means that funds worth one-fourth of the budgetary funds in 2006 will be used in the first three months of next year, which will be enough for regular payments.

Parivodic said that while he is carrying out his duties as coordinator in the Ministry of Finance during the upcoming period, the Ministry will put special emphasis on property issues, which were neglected to a certain degree.

According to Parivodic, the bill on the budget which should be voted on at the government session to be held on November 30 will include the article that privatisation proceeds may be used for restitution.

He said that the Ministry of Finance, within a maximum period of two months will present the government the general law on restitution, laws relating to land reforms, or more specifically the law on city building land, the law on planning and building, the law on state property and the law on border-crossings.

Parivodic said that an analysis was made of the financial balance of the state on November 9, according to which the total amount of the budget stood at RSD 418 billion, tax revenues were worth RSD 363 billion, and non-tax revenues RSD 55 billion.

He specified that according to the balance sheet on November 20, the total amount of the budget is RSD 440 billion, tax revenues are RSD 384 billion, and non-tax revenues RSD 56.5 billion. He added that the financial condition is stable and all payments to physical persons and state organs were conducted in accordance with the law.

The Minister recalled that the first part of the debt for agricultural pensions in the amount of RSD 4.72 billion was paid on November 20, and added that recipients of Pension and Disability Insurance (PIO) will be paid two installments of the debt in December, so that they will get one-fourth more of the pension, for which purpose a sum of RSD 8.5 billion has been allocated.

Parivodic said that adjustments have been made regarding subsidies for housing loans and in treatment of commercial loans which are given by banks which have an agreement with the state.

He explained that the contribution by citizens in state subsidised loans has been reduced from 10% to 5% of the total amount of the loan, while for commercial loans citizens’ the contribution has been reduced from 20% to 10%.

Parivodic said that the realisation of the National Investment Plan is going according to the established programme. He pointed to the fact that there are strong mechanisms in existence for controlling implementation of the National Investment Plan, which are project teams, councils for regulating projects, relevant ministries, and coordinating body, project centre of the Ministry of Finance, as well as the government and Serbian parliament.

He stressed that as coordinator in the Ministry of Finance he will be rigorous regarding the respect of fiscal discipline and economic policy, which should not be brought into question at any cost, and close cooperation with international financial institutions will be continued.

According to Parivodic, the premature payment of debt to the World Bank will be completed, and in the upcoming period work will be done on accelerating mobilisation of loans from the European Investment Bank (EIB) to improve the electricity industry and infrastructure, considering the fact that thus far €310 million has been realised from the approved €809 million.

Parivodic announced that the European Bank for Reconstruction and Development (EBRD) approved €858 million for projects in the areas of energy, telecommunications, traffic and infrastructure, €410 million of which has been realised so far.

Following an initiative to replace part of the debt for investments, the Minister confirmed that some conversions have been made already noting that there is potential for further conversions of up to €1 billion.

Parivodic noted that the budget surplus this year will amount to 0.7% of GDP, whereas privatisation revenues will reach the sum of RSD 130 billion, which is 4.5 times more than last year.

He recalled that currently Serbia’s total public debt is 38.8% of GDP, which places Serbia among less indebted countries, and also noted that exports have grown for the past two years continually, reaching $600 million.

According to him, structural reforms must continue as without them there can be no increase in exports and balancing the foreign trade deficit.

Parivodic noted that foreign currency reserves are between $10 billion and $11 billion, that large foreign investments have been recorded, and that inflation has been curbed, adding that macroeconomic indicators are heading in a right direction.