Serbia Adopts 2016 Budget
Serbian lawmakers approved the 2016 budget, a plan aimed at keeping the budget deficit stable while the government cuts thousands of jobs and sells or closes unprofitable state companies.
Parliament on Saturday approved a general government deficit target of 164 billion dinars ($1.47 billion), a shortfall estimated about equal to this year’s 4 percent of gross domestic product and less than 2014’s 6.7 percent. The budget was approved 161-10. Following three recessions since 2009, the plan assumes growth of 1.75 percent, average inflation of 2.8 percent and a dinar rate of 122.5 against the euro.
The economic outlook “will depend to a great degree on global economic developments and further implementation of fiscal-policy measures,” Finance Minister Dusan Vujovic said on Wednesday as he presented next year’s plan.
Serbian Credit Outlook Raised to Positive by Fitch on Recovery
The outlook on Serbia’s junk credit grade was raised to positive from stable by Fitch Ratings, which cited a narrower budget deficit and a stronger economic recovery.
Fitch affirmed the Balkan nation’s long-term rating at B+, four steps below investment grade and on par with Armenia, Cyprus and Kenya. Serbia is rated at the same level by Moody’s Investors Service, and one step higher, at BB-, by Standard & Poor’s.
“The budget deficit is likely to come in well below the target of 6.3 percent of GDP set at the start of the year,” Fitch said in a statement Friday. “The economy is slowly recovering.”
The economy is now expected to expand 0.7 percent in 2015, compared with a previous estimate for no growth, and 1.7% in 2016, driven by a pickup in investment and a recovery in mining and energy following floods in May 2014, Fitch said.