Tight budget restrictions helped stabilise macroeconomic environment from January to September

Finance Minister Mladjan Dinkic presented January-September budget revenue and spending figures today, noting that tight budget restrictions have helped stabilise Serbia’s macroeconomic environment and contributed to relatively high economic growth.

The restrictive budget policy paved the way for a two billion dinar budget deficit in the third quarter of the year, compared with 18 billion dinars in the same period of 2003, Dinkic told a press conference.

The 2.1 billion dinar budget deficit in July was followed by a 1.7 billion dinar surplus in August, the Minister said, noting that the gap stood at 1.6 billion dinars in September.

In the first nine months of the year, budget revenue totaled 235.6 billion dinars, while spending amounted to 254.8 billion dinars, putting the January-September deficit at 19.2 billion dinars, Dinkic added.

He insisted that the Ministry of Finance has not approached local commercial banks or the National Bank of Serbia (NBS) for loans to finance the deficit, but has rather secured the funding by borrowing from the capital market and appropriating funds from last year’s privatisation revenues.

The Minister went on to say that compulsory social insurance organisations, particularly the pension fund, accounted for the bulk of budget spending in January-September, adding that some 50 billion dinars were allocated for covering the deficit in the pension fund, 4.2 billion dinars for the farmers’ pension fund and 6.3 billion dinars for the gap in the national employment service.

Dinkic also welcomed the efficiency of the tax administration, which he said helped lift budget revenue 21.2 percent against the first nine months of 2003. He noted that the collection of excise tax on tobacco products rose nearly 30 percent year-on-year, while the collection of property tax went up by 20 percent.

Sell-off revenues in September stood at 780 million dinars, up from 260 million dinars in August, the Minister concluded.