First quarter budget surplus reaches 1.3 billion dinars

Serbian Minister of Finance Mladjan Dinkic has said that Serbia’s budget recorded a 1.3 billion dinar surplus in April, the second time this year, with revenues of 34.2 billion dinars and outlays totalling 32.9 billion dinars.

Speaking at a press conference today, Dinkic said that the first quarter of 2005 was marked by budget surplus, improved trade balance, and falling inflation, which stood at 0.8 percent in April.

Dinkic said that the total deficit in the first quarter was 1.1 billion dinars, six times less than in 2004 and nine times less than in 2003. He pointed out that the current public finance policy will be continued, which means a tight fiscal policy based on public spending cuts and better tax collection.

According to him, budget revenues in the first three months of 2005 jumped 25 percent against a year earlier, with the sharpest increase recorded in the profit tax collection, which went up 75 percent.

Dinkic stressed that revenues from the newly introduced value added tax were 38 percent greater than those collected from the sales tax that was effective in the same period of 2004.

He said that revenues from the excise tax on tobacco rose 19 percent against a year earlier, with the collection of taxes on domestic cigarettes surging 77 percent. Tax collection on imported cigarettes declined, leading to a fall in foreign trade deficit, Dinkic added.

The collection of income tax rose 21 percent and the collection of property tax jumped 23 percent against the same period in 2004, according to the Minister.

Privatisation receipts in the first four months amounted to 16 billion dinars, four times greater than in all of 2004, said Dinkic noting that last year’s total of 3.9 billion dinars was largely funded from the sale of Jubanka.

Dinkic is hoping that receipts from the privatisation of companies and banks will grow in the forthcoming period and pointed out that May 16 is the deadline for submitting bids for Novi Sad’s Kontinental and Novosadska banks.

Speaking about foreign trade, Dinkic said that exports have been advancing for the past eight months and that the trade deficit in the first quarter of 2005 fell 37 percent from a year earlier.

Exports in the first quarter jumped 52 percent year-on-year, while imports fell 11 percent against a year earlier, said Dinkic and noted that the export-to-import ratio of 50 percent was still below a satisfactory level.

According to him, most of the exports in the first three months of the year went to Italy, Bosnia-Herzegovina, Germany, and Slovenia, adding that combined exports to these countries jumped 40 percent against a year earlier. This trend, according to Dinkic, helped to reduce deficits in commerce with Italy and Germany by 75 percent and to improve surplus in trade with Bosnia-Herzegovina by one third.

Most of Serbia’s imports in the first quarter came from Russia, Germany, and Italy, while imports from China fell significantly, said Dinkic and added that surpluses have been recorded in commerce with Bosnia-Herzegovina, Macedonia, Slovenia, and Cyprus. He said that energy had the largest share in total imports and added that the sharpest increase was recorded in import of primary gasoline.

Speaking about exports, Dinkic said that Smederevo steel mill’s products top the list, followed by automobile tires, aluminium and copper products, sugar, and footwear.

He pointed out that the Ministry of Finance, aside from creating the Agency for export insurance, has also amended the Decree on prevailing exporters. Dinkic explained that under the changes, prevailing exporters are those whose export revenues account for at least 80 percent of their overall revenues instead of those whose export revenues exceed €10 million a year.

Dinkic also announced that the ministry will soon propose to the government the introduction of new import tariffs, in line with the rules of the World Trade Organisation (WTO) and the European Union. He explained that some of the existing tariffs, which were reduced after the adoption of the action plan for economic harmonisation with Montenegro, will raised again, while tariffs on some raw materials, which were unnecessarily increased, will be lowered.