Q:
A:
Cuts in public spending Finance Ministry’s greatest achievement
Belgrade,
24 July 2009
Minister of Finance Diana Dragutinovic today stated that over the past year the Ministry managed to prevent the financial collapse of the state.
At a press conference presenting the Finance Ministry’s achievements during its first year in office, Dragutinovic noted that during the past year the Ministry cut public spending, provided funds for the construction of Corridor 10 and settled its debts.
If there had not been a radical decrease in public spending budget expenditures would have been higher than RSD 795 billion, instead of the current RSD 719 billion, she said.
Dragutinovic pointed out that the Ministry has managed to solve the problem of its €235 million debt to the road company Putevi Srbije, which will contribute considerably to the liquidity of the Serbian economy.
The sale of newly released state securities have added more than RSD 60 billion to the state budget, she said, explaining that the main reasons for decreases in budget revenues are a fall in both export and public consumption.
The Minister noted that the previous year was very difficult for the Serbian economy, as well as the public and financial sectors.
She stressed that she is only making suggestions on behalf of the Finance Ministry and the government is making final decisions concerning the measures which should be implemented.
The Minister said that a new system for control of tax payers will be introduced with new laws.
Dragutinovic confirmed that Serbia pulled €800 million from the IMF while another €2.2 billion remain to be drawn.
Dragutinovic also said that regardless of the fact the public spending and expenditures have been cut, revenues have also dropped and compared the situation with last year’s when the budget collected approximately RSD 66 billion per month, while revenues this year were around RSD 60 billion a month.
The Minister explained that it would be justifiable if the government suggested to the IMF an increase in the fiscal deficit from 3% to 4.5% of GDP.
The aim of the Finance Ministry in the upcoming period is to increase fiscal adjustment by 1.5% of GDP, and she noted that there are a number of ways to achieve this: increases in VAT, the dismissal of surplus manpower within public administration, new income tax regulations and implementation of reforms in health, education and other sectors.
Increasing VAT just by 1% would generate increased budget revenues of RSD 30 billion, the equivalent of 50,000 government employees salaries, she said.
Dragutinovic also noted that according to European standards, public servants should constitute around 6% of a country’s population.
If there had not been a radical decrease in public spending budget expenditures would have been higher than RSD 795 billion, instead of the current RSD 719 billion, she said.
Dragutinovic pointed out that the Ministry has managed to solve the problem of its €235 million debt to the road company Putevi Srbije, which will contribute considerably to the liquidity of the Serbian economy.
The sale of newly released state securities have added more than RSD 60 billion to the state budget, she said, explaining that the main reasons for decreases in budget revenues are a fall in both export and public consumption.
The Minister noted that the previous year was very difficult for the Serbian economy, as well as the public and financial sectors.
She stressed that she is only making suggestions on behalf of the Finance Ministry and the government is making final decisions concerning the measures which should be implemented.
The Minister said that a new system for control of tax payers will be introduced with new laws.
Dragutinovic confirmed that Serbia pulled €800 million from the IMF while another €2.2 billion remain to be drawn.
Dragutinovic also said that regardless of the fact the public spending and expenditures have been cut, revenues have also dropped and compared the situation with last year’s when the budget collected approximately RSD 66 billion per month, while revenues this year were around RSD 60 billion a month.
The Minister explained that it would be justifiable if the government suggested to the IMF an increase in the fiscal deficit from 3% to 4.5% of GDP.
The aim of the Finance Ministry in the upcoming period is to increase fiscal adjustment by 1.5% of GDP, and she noted that there are a number of ways to achieve this: increases in VAT, the dismissal of surplus manpower within public administration, new income tax regulations and implementation of reforms in health, education and other sectors.
Increasing VAT just by 1% would generate increased budget revenues of RSD 30 billion, the equivalent of 50,000 government employees salaries, she said.
Dragutinovic also noted that according to European standards, public servants should constitute around 6% of a country’s population.
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