Serbia’s budget deficit this year will amount to around three billion euros. In fact, the media reported that the so called fiscal deficit is 225 billion dinars, but when you add the deficits of the social funds, local governments and other expenses, the hole in the state budget reaches (over) 300 billion. This is 40-50 billion more than what the previous, Dacic’s, government planned and what this government, Vucic’s, pledged to significantly reduce by rebalancing the budget. And it turned out that the rebalance is worse than the balance.
So, let’s repeat, because this piece of information should be remembered: this year’s Serbian budget deficit will be three billion euros; give or take 100-200 million, it doesn’t even matter. This means that the public sector in Serbia – the state government, public companies, the judiciary, health and education systems, the pensions, culture and sport – spent three billion euros more than what was collected from the industry by taxes.
At the same time, it means that the Serbian government, so it could cover all these expenses, had to borrow that much money (either abroad or in the domestic capital market). Serbian government debt rose to 70 percent of gross domestic product. Incidentally, the law stipulates that government debt must not exceed 45 percent of GDP. But well, we’re not accustomed to follow the laws to the letter.
If in the past few years Vucic could assign the blame for this to someone else, Tadic Dinkic, Dacic… he can’t anymore; all he can do is look in the mirror.
And we can see where the prime minister’s “soft heart” has brought us. By hesitation, indecisiveness, all sorts of concessions, Vucic led the country into an even worse situation. These trends make Serbia an unstable and insecure country, that is to say – a country unattractive for investment.
At the same time, on the international front, the Serbian policy of “one step closer to the Union, two steps closer to Russia” is also sending contradictory signals. Nobody is sure where the country is really going (or wants to go) anymore.
What may have seemed as a winning combination at first is now becoming an illusion. For example, when Serbia refrained from imposing sanctions on Russia, Vucic’s main argument was the investment in the construction of South Stream, which should provide the deals worth 400 million euros for Serbian companies. However, just before the parade staged in his honor, Putin said that “Russia is not able to build that multi-billion dollar project alone, if our partners are not sure whether they need it”. In other words, the South Stream is on hold until the relations with the European Union are smoothed. Instead, the Russian president has promised us export of cream cheese. In unlimited quantities.
He also promised that Russia, like before, will support Serbia in the future. In line with this support and a promised future, rather like its predecessor, 80 senior Russian intelligence officers arrived in Belgrade from Sofia. Following the decision to move the KGB headquarters from the Bulgarian to the Serbian capital. The news is more than a year old, but it is not bad to have it in mind when trying to explain what has been happening in Serbia recently. As well as what will be happening.
Translated by Marijana Simic