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The Government of the Republic of Serbia

In the service of citizens

Inflow of revenue into treasury as expected

Belgrade, 2 June 2008

Serbian Minister of Finance Mirko Cvetkovic said that the inflow of revenue into the treasury is as expected, but noted that a liquidity deficit is expected in September which can be avoided only by a major privatisation.

Mirko Cvetkovic

In an interview with the daily Vecernje Novosti, Cvetkovic explained that the budget has regular revenue and expenditures as well as a part which refers to payment of inherited obligations, which is financed from privatisation revenues.

He pointed out that the expenditures are also within the planned framework.

The official government website brings excerpts from the interview.

On the reduction of fuel excises:

"Excise tax is not a proportional but a fixed instrument. It amounts to nearly RSD 36 for gasoline and RSD 25 for diesel fuel. Effectively, excise is fixed regardless of the price of fuel."

What did the analysis of fuel prices show?

"If we reduced the excise by RSD 6, then we would have a positive affect on inflation but it would also create a budget deficit of RSD 10 billion by the end of the year. We analysed the excise policy in eleven countries of the region, namely Romania, Austria, Hungary, Bulgaria, Slovenia, Greece, Macedonia, Montenegro, Croatia and Bosnia-Herzegovina. Serbia’s excise taxes are below the average, the highest being in Romania 56%, Macedonia 48% and Slovenia 53%. The lower taxes than in Serbia are those in Montenegro, Croatia and Bosnia-Herzegovina. Speaking of diesel, we have very low taxes of 36%. Only Bosnia-Herzegovina’s excise tax on diesel is lower than ours - 32%, while all other countries vary from 44% to 56%."

On payment of old currency savings and other debts:

"We pay that from privatisation revenue. The pace of privatisation revenue is slow this year. Liquidity deficit is expected in September, which can be prevented by a major privatisation."

What about the projects from the National Investment Plan (NIP)?

"The part of the NIP realised from the budget amounting to RSD 35 billion is going according to plan. There is a part stemming from loans and it is connected to the work of parliament as the loans need to be ratified."

Inflation will be as projected if we generate at least €3 billion in direct foreign investments:

"The inflow of direct investments in the first quarter was nearly €750 million. Investments are going slower because of the current political situation. If this trend continues, economic growth will slow down while inflation will be higher than forecasted. If we reach the level of at least €3 billion, we will attain the planned economic growth and inflation."

Is there money for subsidised loans?

“Subsidies for housing loans are divided into monthly quotas. As there is increased demand for housing loans in the second quarter, the funds are now paid quarterly. New payments can be expected in the third quarter."