Fiscal Strategy for 2018 with Projections for 2019 and 2020
Pursuant to Article 27c paragraph 1 of the Law on the Budget System („Official Gazette of RSˮ, No. 54/09, 73/10, 101/10, 101/11, 93/12, 62/13, 63/13-correction, 108/13, 142/14, 68/15-state law, 103/15 и 99/16),
Government hereby adopts
FOR 2018 WITH PROJECTIONS FOR 2019 AND 2020
I. МАCROECONOMIC FRAMEWORK FOR THE PERIOD 2018 – 2020
1. General framework and main economic policy objectives and guidelines
Preserving fiscal stability while supporting growth
The Republic of Serbia has successfully completed the implementation of the three-year fiscal consolidation program through the Precautionary Agreement with the International Monetary Fund (hereinafter: the IMF). At the end of 2014, the general government sector deficit amounted to 6.6% of the gross domestic product (hereinafter: GDP), while the general government sector debt amounted to 71.8% of GDP with a growing trend. There were two paths ahead, one leading to the total destabilization of public finances and the public debt crisis, while the second implied the application of harsh but necessary measures for the recovery of the government finances.
The results achieved in the implementation of the program are impressive. The initial aim of the necessary structural adjustment of the fiscal result of 4.0% of GDP has been significantly exceeded. In the last three years, a permanent improvement of results of about 6.0% of GDP has been achieved. Public debt has been on the receding path since 2016, which has been accomplished one year earlier than foreseen in the programme.
Priority in the next medium-term period is to maintain the achievements in the fiscal area that have been attained with great efforts, by supporting the initiatives that should encourage growth, such as the increase of the public investment and reduction of the tax burden for low-income workers.