The 2022 Tax Reform i Montenegro – Facts, Misconceptions and Lessons for Serbia

26 January 2024

The elimination of health insurance contributions requires a tangible increase in the rate of value added tax (VAT) to offset the shortfall in budget revenues. ... Read more

Assessment of the Proposed Supplementary Budget of the Republic of Serbia for 2023

25 September 2023

The good side of the proposed Supplementary Budget of the Republic of Serbia for 2023 is that the basic fiscal flows did not get out of control. The planned budget deficit of 2.8% of GDP is undeniably high – although, objectively speaking, it cannot be considered as alarming. However, the main feature of the Supplementary Budget are new and large expenditure ... Read more

Notes to the Opinion on the Draft Fiscal Strategy for 2024 with the Forecasts for 2025 and 2026

28 June 2023

The Draft Fiscal Strategy for 2024 with Forecasts for 2025 and 2026 was submitted to the Fiscal Council for opinion on 19 May 2023. The Fiscal Council, acting in accordance with its statutory obligations and time limits, prepared and submitted the said Opinion to the Government and the National Assembly on 31 May 2023, as required by the regular ... Read more

Opinion on the Draft Fiscal strategy for 2024 with forecasts for 2025 and 2026

28 June 2023

The Draft 2024 Fiscal Strategy with Forecasts for 2025 and 2026 confirms the intention of the Government to gradually progress towards balancing public finances over the medium term. Pursuant to the Strategy targets, the fiscal deficit should decline from 3% of GDP in 2023 to 2.2% of GDP in 2024, and then to 1.5% of GDP in 2025. Thereafter, the identical ... Read more

Assessment of the Proposed Budget Law of the Republic of Serbia for 2023

19 December 2022

The proposed fiscal deficit in the 2023 Budget Bill is relatively high, amounting to RSD 264 billion (3.3% of GDP). When this deficit is compared to the one of 3.9% of GDP planned in the recently adopted supplementary budget for 2022, it is possible to say that the budget for 2023 is gradually taking public finances in the right direction ... Read more

Assessment of the Proposed Supplementary Budget of the Republic of Serbia for 2022

19 December 2022

Compared to the initial budget for 2022, the proposed supplementary budget introduces unusually large-scale changes on both the revenue and the expenditure side. Budget revenue has gone up by as much as RSD 193 billion (EUR 1.6 billion), and expenditure has risen even more sharply - by RSD 272 billion (EUR 2.3 billion). As a consequence, instead of the planned budget gap amounting to RSD 200.2 billion (EUR 1.7 billion), the deficit has surged to RSD 279.1 billion (EUR 2.4 billion)... Read more

Proposed social and tax policy measures for reducing inequality and poverty in the Republic of Serbia

30 September 2022

The crisis caused by the COVID-19 pandemic has shed further light on the problems of inequality in a multitude of countries, including Serbia, where inequality and at-risk-of-poverty rate have stood above the European average for years. In this analysis, the Fiscal Council points out the possibility and necessity for systemic improvements in social and tax policy that would provide additional support ... Read more

Structural problems of the Serbian energy sector in the light of the global crisis: root causes, costs and potential solutions

22 July 2022

The global energy crisis was the trigger that has exposed the local crisis of state-owned energy enterprises, which has been smoldering for quite some time now. As a result of these two crises (the global, and especially the local one), since the autumn of 2021 the question of how to finance and secure the uninterrupted supply of electricity and gas in the country has become Serbia’s main problem. EPS can no longer produce enough electricity to meet domestic needs because it did not invest in its coal mines when it was time ... Read more

Opinion on Draft Fiscal Strategy for 2023 with Forecasts for 2024 and 2025

13 Jun 2022

Draft Fiscal Strategy brings an important anchor for fiscal policy at a time of increased global uncertainty. However, the Draft Fiscal Strategy for 2023 with forecasts for 2024 and 2025 has been prepared in specific circumstances, due to which it has certain objective limitations. First of all, it is still impossible to have a precise overview of how Serbian economy and fiscal policy will be affected by the growing global instability caused by the war in Ukraine, together with the energy crisis and soaring food prices ... Read more

Anti-crisis Budgetary Measures During the COVID-19 Pandemic: Costs, Results and Lessons Learned

13 May 2022

Anti-crisis Budgetary Measures During the COVID-19 Pandemic: Costs, Results and Lessons Learned

As the world is facing yet another period of economic uncertainty, lessons learned from the previous years could help Serbia cope with the looming crisis. Therefore, this paper is relevant not only for expert-level comprehension of policy measures implemented during 2020 and 2021, but ... Read more

15 years of private pension funds in Serbia: Past developments and reform recommendations

26 Janaury 2022

During the last 15 years private pension funds realized real returns of 2.2% per annum but have failed to meet reform expectations. Their investment policy, which relies dominantly on government bonds, is unable to provide satisfactory rates of return going forward; in 2020 and 2021, these were negative in real terms (-0.3% and -6.1%). Despite generous and exclusive tax benefits, the pension funds ... Read more

Assessment of the proposed Budget Law of the Republic of Serbia for 2022

15 December 2021

The proposed Budget for 2022 continues with a gradual fiscal deficit decrease compared to previous years. The planned fiscal deficit for 2022 amounts to approximately 1.7 bn Euros (3% of GDP), which is lower than the deficit of 2020 (3.8 bn Euros) and planned deficit of 2021 (2.6 bn Euros). At that, the envisaged 2022 fiscal deficit leads to a minor decrease of the excessive public debt to GDP ratio (planned to ... Read more

Opinion on the Revised Fiscal Strategy for 2022 with Forecasts for 2023 and 2024

November 8, 2021

Revised Fiscal Strategy preserves the generally well-planned fiscal policy objectives – gradual decrease of deficit and general government debt. The main quantitative objectives of the Revised Strategy have remained unchanged compared to its Draft from May 2021. The fiscal deficit should first be decreased to 3% of GDP in 2022, continuing the declining trend to 1% of GDP in 2024. The objective for public ... Read more

Assessment of the Proposed Supplementary Budget for 2021 and basic recommendations for the 2022 Budget

November 3, 2021

The proposed supplementary budget is aimed at stabilizing public finance, which can be assessed as favourable (with certain objections). Since the public health crisis broke out in 2020, Serbian public finance has been forced to quickly adjust to the situation as it unfolded, resulting in higher one-off expenditures. This resulted in an unusually high number of amendments (supplementary budgets), all of which ... Read more

Opinion on the Draft Fiscal Strategy for 2022 with forecasts for 2023 and 2024

June 11, 2021

In general, the Fiscal Strategy envisages good medium-term fiscal policy objectives. After a fiscal deficit surge during the healthcare crisis of 2020 and 2021, the Fiscal Strategy draft envisages gradual balancing of public finance in the medium term. The fiscal deficit is planned to decrease from about 7% of GDP (the plan for 2021), to 3% of GDP in 2022, continuing the declining trend to 1% of GDP in 2024. ... Read more

Assessment of the Proposed Supplementary Budget for 2021

May 10, 2021

The proposed supplementary budget brings a U-turn in fiscal policy – a stark increase of the budget deficit, leading to public debt growth. After the record-breaking general government deficit in the 2020 crisis, amounting to 8.1% of GDP (about 3.7 bn Euros), it was planned that the 2021 budget would lead Serbian finances to a somewhat smoother sailing. Hence, the initial 2021 budget envisaged a decrease ... Read more

Assessment of the Draft Budget for 2021

December 9, 2020

The budget proposal for 2021 envisages a central government deficit of 178.5 bn dinars (3% of GDP) and a slightly higher general government deficit of about 180.3 bn dinars. This plan, however, rests on the optimistic assumption that the GDP growth in 2021 will amount to a high 6%, which could easily not materialize. In case of a lower economic growth, public revenue would not come in at the planned level, so the ... Read more