Memorandum on the Budget and Economic and Fiscal Policy for 2009 Adopted
At today’s meeting, the Government adopted the Memorandum on the Budget and Economic and Fiscal Policy for the following year, with projections for 2010 and 2011, which strategically delineates directions for development of Serbia. The Memorandum defines macroeconomic stability, low inflation, maintaining dinar exchange rate, further acceleration of economic growth and the biggest investment cycle in Serbian history.
One of the main objectives is to lower the inflation rate from 10.1% last year to 4% in 2011, which would bring Serbia close to the level of EU member countries in this area, too. It also envisages further reduction of share of public expenses in GDP – from 43.8% to close to 40% of the GDP. This will provide for balanced government finance with a mild surplus at the end of the period, which will help Serbia repay its debt more easily, while public debt will be reduced to around 20% of the GDP, making it one of the lowest rates in Europe.
The forecast economic growth rate for 2009 and 2010 is 6.5%. Such economic growth is expected to result in higher GDP per capita – rising from USD5,400 at the end of 2007, to USD9,300 in 2011, which will be a 70% growth.
The Government concluded today that strong macroeconomic framework and economic growth provide a basis for the biggest investment cycle in Serbian history, whereas the Memorandum envisages that nearly EUR10bn will be invested in Serbia every year. A third of this amount will come from public finance, with the intention to use the money for construction of Corridor 10, a highway to Montenegro, Belgrade bypass and construction of bridges. The rest of the funds will be provided from direct investments and by borrowing from international financial institutions and on the capital market.