Fiscal Council of Serbia: Additional increase of budget deficit was not necessary

The additional increase of the deficit of the budget of Serbia in the next three years was not necessary, especially since it is mostly down to the increase in the current budget expenditures, pointed out the Fiscal Council.

Rating the government’s revised Fiscal Strategy for 2025 with projection for the coming years, the Fiscal Council said that it led to an increase of the budget deficit in the medium term to 3% of the gross domestic product (GDP).

– Looking at the individual reasons for the growth of the public expenditures of Serbia in the next three years, it can be seen that some increases were inevitable, primarily those of pension expenditures – the Council pointed out.

According to that independent body, the increase of public investments by around 0.5% of the GDP a year roughly matches the costs of the procurement of the Rafale fighter jets, which were not envisaged in the Draft Fiscal Strategy – so that was also an expected new expenditure.

However, these new expenditures for pensions and public investments (of around 1% of the GDP) are compensated for by the nearly identical upward adjustment of the public income in the coming years. That means that that the increase of the fiscal deficit compared to the Draft Strategy would not have to occur had it not been for a wider growth of the remaining budget expenditures, which are not even well explained in the revised Strategy, the Council warns.

– It is especially unfortunate that the opportunity was missed for the public debt of Serbia to be lowered below 45% of the GDP earlier, through a more frugal plan and a lower fiscal deficit, so the introduction of the fiscal rules on the deficit would not have to be postponed until as late as 2029 – the Council says in its estimate.

Fiskalni savet Republike Srbije

Fiscal Council of Serbia

budget deficit

budget deficit increase

Fiscal Strategy for 2025

fiscal deficit

public debt

revision of GDP