He pointed out that the inflation so far was mainly caused by external influences, which is also indicated by the inflation in the EU, where it is currently 5.2 percent.
“However, it depends on domestic policies whether foreign-imported inflation will continue to flare up in Serbia or will remain under control and gradually slow down by the end of 2022,” Petrovic said.
At the same time, he believes that freezing the prices of basic foodstuffs for 60 days, which was recently adopted by the Government of Serbia, “is neither a good nor an effective measure for permanent restraint of price growth, so it can only have a limited and temporary character.”
“The main lever for permanently curbing inflation during 2022 is rational budget spending. In 2022, a budget deficit is planned and the state will borrow about 1.7 billion euros. The position of the Fiscal Council is that in 2022 the state should be more frugal than that. “, said Petrovic.
According to him, it would be much better to reduce the deficit to one billion euros.
“This would, in addition to calming inflation, also reduce new government borrowing. It would be especially dangerous if, as a reaction to rising inflation, during 2022, salaries in the public sector were additionally increased above the plan,” he pointed out.
He reminded that Serbia’s huge problem is the poor business of public and state-owned companies, which, as he said, undermine the country’s economic growth, instead of encouraging it with their investments and profits, while at the same time huge funds are allocated from the budget.
He stated that he is one of the companies that occasionally receives subsidies and EPS, whose operations the Fiscal Council warned about two years ago, pointing out that not enough is being invested in new mines, as well as various coal separation and processing processes. possibly purer form was used in thermal power plants.
He added that investments in the distribution system were 40 percent less than needed and used only to maintain existing capacity.
“The highest state officials, MPs and EPS itself told us that our analyzes are not valid, and that EPS is a stable and profitable undertaking. They chose to determine the real situation in EPS in a more difficult way, through the current crisis.” wrote Petrovic in the author’s text.
The President of the Fiscal Council also stated that Serbia should work on improving its institutions which are in “very bad condition”, reminding that the relevant World Bank indicator, which monitors the quality of institutions at the global level, showed that since 2015 institutions in Serbia are weak. from year to year.
He stressed that the research showed that the poor quality of institutions, especially in the areas of corruption control and the rule of law, reduces Serbia’s economic growth by about one percentage point a year, “and that is the main reason Serbia lags behind Central and Eastern European countries.” “.
According to him, it is connected with the fact that the executive treats the Budget Law more and more flexibly and non-obligatorily from year to year.
The most extreme case of circumventing standard budget procedures happened, as he stated, the day after the adoption of the Serbian budget for 2022, when new, completely unplanned expenditures in the field of population policy were announced, “which is a strong message as to how non-binding the Serbian budget is.” “.
Perović assessed that the process of selection and execution of public investments is also not at a satisfactory level, although public investments have been doubled since 2017, because the question is whether the funds are really used for priority projects and whether they are implemented efficiently and rationally.
The President of the Fiscal Council concluded that public finances in Serbia remained relatively stable even in the crisis, which is a result of fiscal consolidation carried out from 2015 to 2017, but assessed that public finances in Serbia face challenges such as regulating the system of wages and employment in public sector, reduction of major environmental pollution, emigration of skilled workers, poverty and inequality.