Although the rebalancing of the state budget for this year cannot yet be viewed as a whole, because it has not yet been sent to the Serbian Parliament, according to what Prime Minister Aleksandar Vučić and Finance Minister Dušan Dušan presented on television, the "state savings package" until the end of this year and next year. Vujović, one gets the impression that it was made with a lot of political skill, that is, "social sensitivity", but without a clear answer to the key question - whether and when this "renunciation package" of the population will bring not only the state but also and its economy. In fact, only on the basis of the budget proposal for 2015 will we see whether, after the announced forced restrictive measures, there will really be a fundamental reform of the state administration and the government's economic and foreign policy.
The fact that Prime Minister Vučić constantly insisted that he personally sought to protect the poorest due to state problems, so he divided pensioners and employees into those below and above 200 euros in monthly income, points to the dangerous conclusion that even by "cutting" pensions and salary again bypass the "painful reforms" of the system that legitimately creates public deficits and that conditions are created for the alliance of the political leader and the poor against the middle class and the rich, which in socialist history was called "dictatorship of the proletariat".
ACCEPTANCE OF GUILT: After all, this is how Prime Minister Vučić formulated his relationship with the most vulnerable pensioners in the TV show "Oko" on RTS (September 18): "This is my fault and if the Fiscal Council should blame someone, it should blame me , because I wanted to protect as many pensioners as possible. A total of 1.752.000 people receive pensions in Serbia. Of that, 744.000 of them receive 20.000 dinars, and we will not touch them. We will not touch even those who receive between 20.000 and 25.000. In total, 60,2 percent of all pensioners (1.038.000 pensioners) will not pay anything... I know how hard people live. We tried to protect the poorest, because I also look at people, not just papers."
When it comes to employees with low salaries, Vučić mentioned that 113.000 people in the public sector receive salaries of less than 25.000 dinars and that they will also be protected. At the same time, he said that he knows that it will not be easy for anyone, but, as he says, they will be able to live and save their jobs. In this show, we learned that in Serbia, in the public sector and public enterprises, there are 31.167 employees who earn more than 100.000 dinars and that they will bear the biggest burden, but he did not specify by what percentage their wages will be reduced.
The planned savings from cutting wages and pensions, Prime Minister Vučić said in the RTS show "Oko", amounts to around 400 million euros, and the planned (that is, the required) 700 million will be achieved with total "difficult measures". In fact, experts estimate that cutting pensions and salaries will have an effect of around 350 million euros, and the other half of the necessary reduction in state spending has yet to be found. And not only by "stretching" the effects of the fight against the gray economy to unrealistic heights.
LAND POLICY: When it comes to the rich, in the TV show Vučić took the example of state-owned land lease, where the average lease price is 128 euros per hectare, and the state incentive is 100 euros per hectare (so theoretically it turns out that the real rent is only 28 euros per hectare ), so he said that it is unsustainable and that the incentives will be paid only to small holders (allegedly the limit of the "new maximum" is set at 50 hectares). However, he did not explain why the seized land from the state fund of 400.000 hectares is not returned to the owners and their heirs, according to the Law on Restitution (about 100.000 hectares), and the remaining 300.000 hectares are not auctioned off - so that the state land would not be rented out by tycoons, so to speak, for free and agro-brokers. After all, he forgot to mention that in the European Union no difference is made between small and large holdings, but everyone is paid the same stimulation per hectare.
Although it is understandable that Vučić is trying to reduce the "political costs" of both himself and the SNS that follow them due to such an unpopular measure as the literal lowering of salaries and pensions, in a situation where, as he said, "Serbia is thousands of miles away from bankruptcy " (that is, until April next year), the whole idea that the state budget and credit capacity of Serbia in the coming times, which will probably be worse than today's quite facilitating ones on the world financial market, are preserved almost exclusively at the cost of only a little the recovered middle class (recovered from Milosevic's policy) - speaks of the fact that neither Dacic's nor now Vucic's government have gained credibility in international circles, that is, they have not received approval for a somewhat more offensive economic policy and reindustrialization, which would entail a new cycle of borrowing in the West , now that the interest rates of the European Central Bank are almost at zero.
VOLUME OF BORROWING: True, in the last two and a half years, Dačić and Vučić borrowed in the world and at home for the "current liquidity" of the state for nearly 7 billion euros (which is now respected by the president of the DS, Bojan Pajtić, who declared on behalf of his party against a package of savings on pensions and salaries), but with that money they achieved almost nothing more permanent. Because the inertia of the system, its orientation and the interests of the state apparatus is great and difficult to change. However, Vučić and his "forced allies" from the socialist camp showed little ingenuity and relatively little interest in quickly getting rid of the ever-increasing costs of state capital, which still accounts for over 50 percent of all capital in Serbia, and they showed the least courage to give up state financial instruments that keep the economy under direct control, and more broadly economic relations with Russia and China, despite the nominally "pro-European strategy".
The question of why Prime Minister Vučić, after much hesitation, still decided to start cutting salaries and pensions, can be answered with a lot of probability. Perhaps the decision was accelerated by the news that the expected gross domestic product of Serbia will almost collapse this year, because against the "planned" GDP for this year of 4.008 billion dinars, it is estimated that 3.675 billion dinars will be realized, that is, more than 8 percent less than the plan on which this year's budget was built.
Elem, since about 14 percent of the planned GDP is allocated from the budget for pensions, and 11 percent for salaries in the public sector, which is too much according to the neighboring countries, the problem becomes even greater with a real reduced GDP. And because of this, as mentioned by Minister Dušan Vujović (in the program "Stav of Serbia", TV Prva, September 21), the share of public debt in Serbia's GDP (due to its reduction) now rises to 75 percent, while before the start of the world crisis was at the level of 29 percent, and until yesterday it was calculated with about 65 percent of that participation. However, the level of the budget deficit expected this year was not publicly assessed by the Minister of Finance this time either. By the way, the budget deficit was planned for 2008 at 50 billion dinars, and for this year at over 180 billion, which will probably be significantly exceeded. According to the assessment of Pavle Petrović, the president of the Fiscal Council, the budget deficit will reach 2,5 billion euros this year, and it will allegedly account for 8,4 percent of the GDP - which is the largest budget deficit in Europe.
INTELLIGENCE OF CONTENT: The drastic drop in the expected GDP and the breakthrough of the projected budget deficit, however, are not only a consequence of the rainy weather and the extraordinary elections in Serbia. Hence, there was no other option but to send a message to the world's creditors that salaries and pensions will be "cut", that is, they will realistically strive for fiscal consolidation through (in principle) the worst, i.e. the most restrictive, direct measures. That is why the courtesy greetings to Vučić's package from the European Union and the World Bank have already been published. We will see whether such support will come from the IMF and whether an agreement will be reached with the "world protector of creditors" through the projection of the budget for 2015 (because IMF missions in negotiations with Serbia, as a rule, side with the Fiscal Council , who seems to think that the adopted savings measures are not enough to stop the necessary increase in the share of public debt and the budget deficit in the GDP for several years).
After seven days of various explanations of Vučić's television statements and Vujović's media explanations, our readers probably already have an inkling of the content of the expected budget rebalancing and fiscal consolidation strategy, or rather the model of lowering wages and pensions, but we have to describe it again briefly here. Therefore, pensions and salaries of less than 25.000 dinars are not reduced and thus more than 1.200.000 people are put in the position of perceiving Vučić as their protector. In the case of pensions, although the legal formula is apparently still being worked on (as Minister Vujović explained in "Blic"), any amount above 25.000 dinars is multiplied by 0,22 and thus the amount of the reduction is obtained. This means that pensions are reduced in the range of about 1 to 16,5 percent, i.e. progressively. In the case of salaries in the public sector, including public companies, the formula is similar, with the fact that the percentage of salary reduction above 100.000 dinars is still being worked on. The message is sent to those better paid that the "solidarity tax" (20 percent tax on salaries over 80.000 dinars) will be abolished, so their actual salaries will remain the same or will be minimally reduced.
Vujović explained on television that in addition to the "cutting" of pensions and salaries, several other measures are being prepared - a freeze on employment in the public sector, refinancing of old expensive loans (a benefit of around 2 billion euros is calculated on lower interest rates), savings in public procurement, an increase scope of tax collection and claims of public companies, etc. In addition, Vučić stated that a "payment" to the budget of around 150 million euros is expected from public companies in January, and Vujović explained that part of that payment will in fact be a "relief" of the budget to cover debt in public companies, which will practically provide by raising the prices of services and goods of those companies.
MUK PROFESSIONAL PUBLIC: By the way, for this year, 2014, in the state budget, it is planned to issue state guarantees for loans of public companies and state institutions in the amount of 787 million euros, and how much will be approved for this purpose by the rebalancing and projection of the budget for 2015 has yet to be determined. we see At the same time, we should not forget that the annual subsidies to public companies alone have so far been at the level of 150 billion dinars, and that the debts of public companies reach around one billion euros.
It is interesting to note that after the announcement of the contents of the "savings package" presented by Prime Minister Vučić last week, few reactions from the professional public can be found in the media. The braver ones previously sided with the Fiscal Council, which believed that salaries and pensions should be cut by 15 percent, that is, that the proposed measures are insufficient and should have been taken much earlier, so they would be less painful - but now the Fiscal Council and our leading economists are silent or no one asks them anything. Along the way, one can hear among the experts that the main unknown is how much the reduction of pensions and wages, along with other financial pressures on citizens, will reduce demand next year, which will further collapse the private sector that supports the entire social superstructure, that is, the fall in demand will further reduce Serbia's GDP - therefore, the percentage share of public spending in it will remain the same or even increase, which would mean that we have entered a spiral of permanent impoverishment in the long term.
"Look, the debt went from eight to 17,67 billion in just four years," Prime Minister Aleksandar Vučić explained on the show "Oko" the trend of public debt from the end of 2008 to the end of 2012. What the viewers were not shown was the continuation of the graph - what happened to the public debt from 2012 until today. On Tuesday, September 23, the public debt of the Republic of Serbia amounted to 21 billion and 948 million euros (source: Public Debt Administration).
In addition to "debunking" the graphic representation of borrowing for 4,28 billion euros in the last year and nine months, Vučić failed to say that the government in which Ivica Dacić was the formal prime minister participated in the creation of the debt shown on television. The government of Ivica Dačić was formed at the end of July 2012. It was faced with a public debt that amounted to 15 billion and 469 million euros. In just five months, from August to the end of December 2012, the public debt grew by 2,25 billion euros, and entered 2013 with a debt of 17,72 billion (this data differs from the amount of 17,67 billion, which mentioned by the Prime Minister; according to the Public Debt Administration, Serbia owed 2012 billion and 17 million euros at the end of 717). In just two months, in October and November 2012, the Government of Serbia borrowed 1,71 billion euros. For the sake of comparison, this is the sum for which Serbia borrowed in the period from the end of 2005 to the end of 2010.
Already in February 2013, the government borrowed another billion and a half euros, so at the end of 2013, Serbia ended up with a public debt of 20,14 billion - 2,42 billion more than at the end of 2012. Finally, from the beginning of 2014 to today the public debt has grown by another 1,8 billion euros. The government elected on March 16 and formed on April 27, when Vučić formally became prime minister, borrowed another 22 billion euros from the beginning of May until September 1,29. In total, if we add up the debts made for the previous two years and two months (July 2012 - September 2014), we arrive at a figure of almost six and a half billion euros (six billion and 479 million).
R. Marković
