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The Government of the Republic of Serbia

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Cvetkovic calls upon MPs to adopt budget before year’s end

Belgrade, 26 December 2008

Serbian Prime Minister Mirko Cvetkovic called upon MPs today to adopt the budget before the year’s end, warning that if the state shifts to provisional financing, it cannot lead an adequate economic policy.

Mirko Cvetkovic

Author: Tanjug

In an interview for the Tanjug news agency, Cvetkovic reiterated that budget is economic policy, adding that if there is no budget, there can be no economic policy.

Asked about the consequences to Serbia if it enters 2009 on provisional financing, the Prime Minister replied that the key consequence will be the government’s inability to conduct the fiscal part of its economic policy.

However, he voiced belief that the budget may yet be adopted before December 29, explaining that there are technical capabilities for that.

He noted that it is technically feasible to adopt the budget before year’s end since it is only a matter of MPs’ political willingness.

The Prime Minister said he proposed a model to MPs according to which the number of the remaining working hours of the budget session can be calculated and then distributed evenly amongst parties, who will then decide how to use their time.

If the proposal goes through, we may adopt the budget on time, because this way everyone would have an opportunity to talk about what they want, said the Prime Minister recalling that he has informed MPs that, if they want to discuss amendments more, they should do it simultaneously in groups at the session.

These would be talks at an expert level and we would be ready to accept all amendments that do not bring down the budget concept in its essence, he stressed.

Since the global crisis cannot go round Serbia, the government has prepared a restrictive and stimulating budget for next year, but if we shift to provisional financing, the budget will lose the stimulating component, explained the Prime Minister.

When I was expounding the budget proposal, I said that it is of restrictive and stimulating character, the former part reflected in savings, and the latter referring to encouragements to the economy to achieve a growth rate of 3% to 3.5%, he recalled.

As for the arrangement with the IMF, he said that the IMF Board of Directors is to decide on that in mid-January, adding that it has not yet been confirmed whether the IMF will put off its decision if Serbia’s budget is not adopted before the year’s end.

The Prime Minister recalled that Serbia could ask the EU for macro financial assistance of around €400 million, but added that this can be complicated due to elections and administration change within the Union.

This is why Serbia should adopt the budget and then count on those funds at the latest by February next year, he said.

If we do not adopt the budget, we will have to ask the IMF to convert the agreement, which implies withdrawing a $520 million loan.

This was not planned at first, because Serbia has considerable foreign currency reserves, said Cvetkovic noting that if the budget is not adopted on time, all parliamentary debates and submitted amendments would be annulled and the government would have to withdraw the proposed budget and send it to parliamentary procedure again.

This is complicated and it means we must have the general discussion on it once again. In the case of such a “bad scenario” our country will send a negative message to potential investors, who we need even more in the upcoming days, he warned.

This is why I call upon MPs and caucuses to find strength within themselves and help adopt the budget, said the Prime Minister.

Speaking about what awaits Serbia in 2009, he said that economy will remain within the projected growth limits because food industry will not be affected by the crisis.

If the growth turns out to be lower than projected, we will have a deficit in the budget, he explained adding that the government will continuously monitor the situation and take the necessary measures when the need arises.