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2.10.2008.

Draft Law on Changes and Amendments to the 2008 Budget Law and Memorandum on the Budget and Economic and Fiscal Policy for 2008, with projections for 2010 and 2011, Adopted

At a session held on 02 October 2008, the Government of the Republic of Serbia adopted the Draft Law on Changes and Amendments to the 2008 Budget Law and Memorandum on the Budget and Economic and Fiscal Policy for 2008, with projections for 2010 and 2011.

The Draft Law on Changes and Amendments to the 2008 Budget Law of the Republic of Serbia specifies total revenue of the Republic of Serbia at RSD650.174,3 million, total expenditure and net borrowing at RSD695.959,1 million, while the stipulated deficit is RSD45.784,7 million.

Minister Dragutinovic underscored that the revenue/GDP ratio increased by 0.4%, the share of expenditure grew by 0.6%, whereas the deficit rose by 0.2%. “The increase in fiscal policy expansiveness was not outstanding, but it was realized in the atmosphere of high demand and overheated economy. It is necessary that we take a turn toward cutting the share of government expenditure and fiscal deficit in GDP as of 2009 already”, Diana Dragutinovic highlighted.

1.10.2008.

Public Statement

Within the Financial Management Framework concerning support to implementation of the Development Cooperation Agreement between the Government of the Republic of Serbia and the Government of the Slovak Republic, Serbian Ministry of Finance and Slovakian Ministry of Foreign Affairs signed a Financial Memorandum on 30 September 2008.

The legal framework for cooperation between the Republic of Serbia and the Slovak Republic is the Development Cooperation Agreement between the Government of the Republic of Serbia and the Government of the Slovak Republic, signed on 03 December 2007. Concrete conditions and the amount of allocated funds are specified in Financial Memorandums, which are signed separately for every year of cooperation – five Financial Memorandums had been signed up to 30 September 2008. Financial Memorandum I granted EUR1.3 million in assistance, Financial Memorandum II allotted EUR1.6 million, Financial Memorandum III allocated EUR1.5 million, whereas Financial Memorandum IV granted SKK50 million (around EUR1.3 million). The Fifth Financial Memorandum for 2007 was signed on 06 May 2008 and SKK64 million (around EUR1.9 million) was granted for candidate projects in 2007.

30.09.2008.

Government adopted the Report on Granted State Aid

On September 18, 2008, Government adopted the Report on Granted State Aid in the Republic of Serbia in 2006, an analytical (comparative) survey of allocated state aid in 2004, 2005 and 2006. The 2006 Report contains data collected from authorities granting the state aid, and in its preparation in the greatest possible extention has been applied the methodology prescribed by the European Commission in the field of state aid reporting.

29.09.2008.

Public Statement

Within the financial management framework concerning support to the Development Cooperation Agreement between the Government of the Republic of Serbia and the Government of the Republic of Slovakia, Serbian Ministry of Finance and Slovakian Ministry of Foreign Affairs will sign a Financial memorandum in the Cabinet of the Minister of Finance, 20 Kneza Milosa St., at 4:00 p.m. on Tuesday 30 September 2008.

26.09.2008.

Public Statement

The Ministry of Finance and “Support to the Serbian Ministry of Finance” Project supported by the UNDP on the occasion of the successful conclusion of the Project, held an appreciation meeting on Friday, 26 September 2008 at 2:00 p.m. at the Ministry of Finance, Kneza Miloša 20. Minister of Finance Diana Dragutinović, United Nations Development Programme Resident Representative Lance Clark, and Royal Netherlands Embassy Deputy Head of Mission Tsjeard Hoekstra attended the event.

On behalf of the Ministry of Finance State Secretary Janko Guzijan expressed gratitude to the Government of the Kingdom of the Netherlands and UNDP for their enormous contribution to the Ministry of Finance’s capacity development during past seven years. The State Secretary expressed deep belief that the cooperation with the Government of the Kingdom of the Netherlands and UNDP will continue in the future as well.

22.09.2008.

2008 Budget Revision by October 5

Minister of Finance Diana Dragutinovic underscored that money in the state coffers should be redistributed, while some 55 billion dinar gap in the budget would be covered from current revenues and by reallocation of expenses. “The 55 billion dinars can be covered with real money”, Minister Dragutinovic highlighted.

The Minister specified that additional spending was required because of expenses related with establishment of a joint venture between Serbia and Italy’s Fiat, as well as due to financing of the construction of Corridor 10 and the 10 percent increase in October pensions that will be paid in November.

17.09.2008.

The New Law on Public Procurement Will Bring Budget Savings

State Secretary of the Ministry of Finance Slobodan Ilic at today’s press conference said that the new Law on Public Procurement will enable significant budget savings, contribute to the enchantment of the competition and of private sector, as well as to the creation of supplementary anticorruption mechanisms. “By enacting this law, whose bill has already been sent by the Serbian Government to the Parliament for the adoption on urgent procedure, the state will be able to fulfill one more precondition on Serbia’s EU accession path”, said Slobodan Ilic.

State Secretary Ilic pointed that with this draft law, more than two thirds of the current Law on Public Procurement have been altered. As State Secretary Slobodan Ilic specified, the new law will bring formal changes, but will also cut down the expenses and administrative procedures’ timeframes, it will also improve public procurement procedure and its efficiency, as well as introduce better control, surveillance and bidders’ rights protection.

11.09.2008.

Public statement of the Ministry of Finance concerning the Interim Agreement on trade and trade-related matters between the European Community and the Republic of Serbia

The National Parliament of the Republic of Serbia ratified the Stabilization and Association Agreement and the Interim Trade Agreement on September 9, 2008. The SAA and the Interim Agreement were signed in Brussels on April 29, 2008.

The SAA will come into force after its approval by the EU Council of Ministers and the European Parliament and ratification in all the signatory countries, the EU member states. The Interim Agreement will be enacted after it is confirmed by the Council of Ministers and the European Parliament.

The Interim Agreement encompasses the trade-related section of the SAA. It regulates the bilateral trade in industrial and agricultural products and will be applied until the SAA is ratified in all the EU member countries.

4.09.2008.

Public Statement

As of July 2008, the Ministry of Finance has been reporting on execution of budget revenues and expenses in line with standard and internationally comparable methodology created by the International Monetary Fund (Government Finance Statistics – GFS, 1986). The main difference between the previous and the new methodology is that the former methodology overestimated budget revenues (by including the license for mobile telephony) and underestimated expenses (by failing to include loans and repayment of debt to pensioners). Therefore, the planned RSD14.8 billion budget deficit for this year (according to the former methodology) grew to RSD44.9 billion with application of the standard international methodology.

Simultaneously, for reasons of comparability, the Ministry of Finance has continued to report by following the former methodology, in line with which the 2008 Budget Law was adopted. According to the former methodology, the budget of the Republic of Serbia created RSD3.9 billion surplus in the first eight months of 2008, while the standard international methodology (GFS 1986) indicates that the budget posted RSD17.4 deficit.

29.08.2008.

Budget Revision Proposal in September

The State Secretary at the Ministry of Finance Janko Guzijan announced that a revised budget will be presented to the government in September and discussed and adopted in the Serbian Parliament by mid-October. In preparing the revision, the objective of the Ministry of Finance will be to curb public expenditure and budget deficit, that is, to provide funds for additional expenses by reallocation.

The State Secretary Janko Guzijan also highlighted that the Ministry of Finance expects the budget revenues to increase by up to RSD20 billion, as a result of stronger economic growth, but also due to inflation, which will be higher than originally planned. In the first seven months of the year, revenues in state coffers were 18 percent higher relative to the same period last year.

28.08.2008.

Extraordinary 10% Pension Rise

State Secretary Janko Guzijan’s interview to the national broadcaster RTS, 28 August 2008

After some three weeks of consultations, the government will consider the proposal by the Ministry of Labor and Social Policy regarding extraordinary pension increase in October 2008. The last proposal agreed with the Ministry of Finance, which adopted a positive opinion on the proposal of the Ministry of Labor and Social Policy, suggests that on top of the regular adjustment of pensions in October, pensions should be increased extraordinarily by further 10 percent.

28.08.2008.

RSD8 billion from Budget Revision for Extraordinary Pension Increase

Janko Guzijan, State Secretary at the Ministry of Finance, announced extraordinary ten-percent pension hike. “The Ministry of Finance will support the proposal made by the Ministry of Labor and Social Policy, provided that funds are created by revision of the budget for this year. Additional funds for pension-related expenses will be provided from supplementary revenues in the budget and savings on other budget positions, which will be defined by budget revision. The estimates are that some RSD8 billion need to be allocated for the extraordinary adjustment of pensions”, Guzijan said.

4.08.2008.

Diana Dragutinović: “From the budget firstly for the neediest”

If September pensions were to see extraordinary increase of 10 percents, and seven percents in October based on regular indexation policy, the total pensions’ nominal growth in this year would reach round 40 percents, while their real growth, aligned with this year’s inflation of some 12 percents, would be 28 percents. In no country is possible, that with production growth levels of 7-8 percents, incomes of 1.6 million population, in this case the pensioners, have real growth of 28 percents without that causing significant inflator pressures, said for Politika daily Minister of Finance Diana Dragutinović, PhD.
The Minister is in favor of differentiated pensions’ increase which would reduce the gap between minimal and maximal pensions, i.e. pro increase of the minimal pensions only. However, she is against Regulation that would, according to the Prime Minister’s announcements, secure extraordinary pensions’ increase as of September because the Law regulating pensions issue is in force.

1.08.2008.

The Government is still not selling Dunav insurance company

The Ministry of Finance State Secretary Slobodan Ilic commenting unofficial announcements on Polish biggest insurance company PZU intention to purchase Dunav insurance company, the only state-owned insurance company in Serbia, and Slovenian Triglav insurance, and intention to pay for it 4.9 billion Dollars (3.2 billion Euro), Ilic says that offer is still not an official one.
“Neither has the Government or the Ministry of Finance, nor the Deposit Insurance Agency received any announcement of such interest, but the news circulated in the media are the only information we have”, Ilic is pointing out.
“The experience is teaching us that in estimating interests expressed in the media, we should be more than cautious having in mind that in the past potential candidates in the privatization process have went publicly with certain numbers for which they “allegedly” were willing to pay, and that real life failed showing that, witch led us to the conclusion that we were facing the attempt to “create appropriate ambient and general public atmosphere” aimed at grasping the best start-up position in the bid and elimination of potential competition”, said Slobodan Ilic, State Secretary at the Ministry of Finance.

30.07.2008.

Diana Dragutinovic: "Padlock on the Budget"

Minister of Finance Diana Dragutinović in the interview for the Ekonomist magazine says that after this year’s deficit estimated to exceed 700-800 million Euros, Serbia in the next year has a great chance to balance the budget, even to have it in the mild surplus.
For the Ekonomist magazine, Minister states that at no cost she is to allow for expansive fiscal policy to jeopardize macroeconomic stability. Diana Dragutinović says that she will insist on saving measures on all levels, and that implies that in the next year public sector wages will grow slower against gross domestic product (GDP).
The Minister of Finance has also announced that she will stand in favour of capital gain and real, i.e. absolute rights tax ablation, and that in the course of two years capital transactions will be completely liberalized.

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