Q:
A:
No VAT increase in 2012
Belgrade,
23 November 2011
Prime Minister Mirko Cvetkovic stated that the budget deficit will be RSD 152.2 billion next year, which is 4.25% of the projected GDP.
File photo of Mirko Cvetkovic
Author:
Tanjug
In an interview to the Ekonomist magazine, Cvetkovic said it has been agreed to send the budget proposal to the Serbian Parliament by 15 December, stressing that because of the way in which the budget for 2012 was conceived, VAT will not have to be increased next year.
He underlined that a VAT increase would have a positive effect on the budget, but also negative ramifications for the population, adding that Serbia is one of the rare countries going though the several years long crisis period without raising this tax.
During the talks with the International Monetary Fund (IMF), the government aimed at a somewhat lower deficit than the one dictated by fiscal rules, and that is 4.5% of GDP, bearing in mind that in a certain percentage, this deficit would have an effect on the public debt which will get close to the top limit of 45% of GDP, the Prime Minister observed.
This autumn Serbia withdrew $1 billion on the basis of Eurobonds, which increased the public debt, but the funds were not spent, so the net public debt has not changed, he said.
When it comes to whether Serbia is ready for the new blow of the crisis, Cvetkovic announced some incentives that are under preparation, and added that certain subsidies for agriculture will be kept.
The government expects an economic growth of 1.5% in 2012, whereas this year Serbia will have a 2% growth, he said.
Cvetkovic said that Serbia is likely to exceed the debt limit of 45% of GDP and will then have to adopt a programme in order to bring public debt down to permitted levels.
Fortunately, much of our debt obligations are distributed over a number of years so annual installments are not enormously high to endanger the liquidity, explained the Prime Minister.
He underlined that a VAT increase would have a positive effect on the budget, but also negative ramifications for the population, adding that Serbia is one of the rare countries going though the several years long crisis period without raising this tax.
During the talks with the International Monetary Fund (IMF), the government aimed at a somewhat lower deficit than the one dictated by fiscal rules, and that is 4.5% of GDP, bearing in mind that in a certain percentage, this deficit would have an effect on the public debt which will get close to the top limit of 45% of GDP, the Prime Minister observed.
This autumn Serbia withdrew $1 billion on the basis of Eurobonds, which increased the public debt, but the funds were not spent, so the net public debt has not changed, he said.
When it comes to whether Serbia is ready for the new blow of the crisis, Cvetkovic announced some incentives that are under preparation, and added that certain subsidies for agriculture will be kept.
The government expects an economic growth of 1.5% in 2012, whereas this year Serbia will have a 2% growth, he said.
Cvetkovic said that Serbia is likely to exceed the debt limit of 45% of GDP and will then have to adopt a programme in order to bring public debt down to permitted levels.
Fortunately, much of our debt obligations are distributed over a number of years so annual installments are not enormously high to endanger the liquidity, explained the Prime Minister.
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