Proposal of Budget Law for 2004 presented

Finance Minister Mr. Mladjan Dinkic has presented today, at a press conference, Proposal of Budget Law for 2004, adopted by the Government on March 18 and forwarded to the Parliament for adoption under emergency procedure. Budget proposal for 2004 envisages revenues of 329.3 billion dinars and public spending of 374.6 billion dinars, Minister Dinkic pointed out. Resources for projected 45.3 billion dinars budget deficit to be met will be provided from net financing at the domestic market (15.7 billion dinars), from donations (around 3.7 billion dinars), from privatization funds (16.4 billion dinars), and international loans (15.7 billion dinars).

Financing also includes using funds collected from privatization during the previous year, issuing of the Republic of Serbia treasury bills and loans granted by commercial banks.

This year budget plans 4.3% GDP growth, per industries, compared to the previous year. The strongest growth is expected in agriculture sector (8%), Minister Dinkic explained and added that agricultural budget is three times larger than the ones executed in the previous years.

Public investments will have a much larger share in total public spending and GDP compared with the previous budget, said Dinkic, describing the new budget as both socially and development-orientated spending plan.

This proposal includes financial plans of republic funds for pension and disability insurance of the employed, farmers and private sectors, Republic Fund for Health Insurance, and National Employment Service, for this year.

“Bearing in mind that during last two weeks, we have not had an opportunity to check whether the plans of these funds are realistic, one of the first moves of the Ministry will be budget inspection in the Pension Fund”, said Dinkic and added that an audit of the Fund’s expenditure will be executed, as well as of the Republic Fund for Health Insurance.

Largest budget items are agriculture subsidies, which are 18% higher compared to last year, excluding the subsidies for military production in the Military Budget. Direct stimulations for industry account for 9.7 billion dinars, including billion dinars for export subsidies, emphasized Minister Dinkic. Total expenditure for industry stimulations, allocated to the Ministry of Industry, Ministry for International Economic Relations and the Army amount to 11.2 billion dinars, Dinkic added.

Finance Minister specified that the largest item in the budget is investing into traffic development, which is 2.5 times higher compared to the previous year, meaning 12.9 billion dinars earmarked for that purpose, i.e. 184 million euros for construction of new roads, and 57 million euros for the repairs of the existing ones.

For the first time, the budget envisages resources, amounting to 2 billion dinars, for the purchase of 200,000 tons of wheat, for commodity reserves. Major novelty is the introduction of short-terms credits for operating capital; six-months, or one-year, credits for agriculture, and middle-term credits for purchase of equipment or construction of buildings. 3.8 billion dinars in the budget are set aside for these items, and interest rate should not exceed 3% per annum, Minister Dinkic pointed out and went on to say that only the registered entities, which hold an account with a bank can use these credits.

This budget also envisages resources for foundation of national housing loan insurance corporation, as well as for the setting up of an export insurance fund.

Largest savings in the budget are planned to be achieved cuts in State Administration spending, i.e. through reduction of cost for business trips (15%), so called “in-kind compensations” (13%), regular expenses (7%), temporary service contracts (8%), and current maintenance costs (5%).

At the conference, Minister Dinkic particularly mentioned additional amendments to the Decree on the manner of recording turnover through cash registers with a fiscal memory, concerning the extension of deadlines for introduction of fiscal cash registers. According to the new Decree, a possibility of graded fine at the spot, amounting to 20,000 dinars for legal entity, as well as 5,000 dinars for responsible person.