“Not only is the increase in public debt by about two billion euros higher than necessary due to indiscriminate spending, but the available economic policy mechanisms in a possible new crisis have been unnecessarily reduced,” the Fiscal Council said.
The war in Ukraine, as stated, with the already present high inflation and energy crisis, will lead to new economic instability in European countries, which would be followed by a health crisis.
According to the Fiscal Council, for the anti-crisis package of measures due to the pandemic, Serbia gave, relatively speaking, 55 percent more funds from the budget compared to comparable countries in Central and Eastern Europe (CEE), or 10.4 percent of gross domestic product (GDP). according to which it was a record holder in relation to all countries, which spent 6.7 percent of GDP on average.
The allocated budget funds for supporting the economy in Serbia were too large, which saved employment, but the problem is their irrational distribution, said the Fiscal Council, explaining that lessons should be learned from mistakes because the new crisis will require strong budget interventions.
“Serbia’s public finances bore a huge burden during the health crisis of about 5.4 billion euros. The pandemic demanded a strong increase in budget expenditures for health, but also to support the endangered economy and population, and the funds were provided by borrowing, so that was the main reason due to which the public debt of Serbia was increased by about six billion euros from the end of 2019 to the end of 2021 “, stated the Fiscal Council.
Strong fiscal interventions have contributed, as stated in the analysis, to the recovery of European economies from a deep recession in a very short period of time. Serbia in the first quarter of 2021 They were not rational in Serbia.
“For extraordinary health expenditures, 1.1 percent of GDP in Serbia was given in relation to the CEE average, which is justified because it did not have enough health capacities, 0.6 percent of GDP was set aside to support the economy more than in those countries, and for the support of the population even 2.1 GDP more than in the countries with which it can be compared “, it is stated in the analysis.
It is added that the main goal of fiscal measures to support the economy was to prevent an excessive decline in employment, which is why
most of the budget funds in both CEE and Serbia are paid per employee, usually in the amount of the minimum wage or part of the minimum wage.
In addition, some countries, including Serbia, have taken additional measures such as delays or temporary tax exemptions.
“Serbia provided slightly more budget funds to help the economy in 2020 and 2021 compared to the average of CEE countries, 4.8 percent of GDP compared to 4.2 percent of GDP. We believe that this difference was not justified.” especially since Serbia is due to
the specific structure of its economy was less affected by the crisis than other European countries, “the Fiscal Council said.
The analysis pointed out that an even bigger problem than the size of allocated funds in Serbia was their poor distribution.
In CEE countries, on average, about 75 percent of state aid paid went to crisis-affected companies whose turnover fell by 20 to 50 percent, or to particularly affected areas, such as tourism, and in Serbia less than 10 percent of funds were given to particularly affected activities, tourism, catering, bus carriers, car rental, and more than 90 percent of the funds were distributed regardless of the vulnerability of the company.
“Thus, the budget money was unjustifiably poured on companies that were not affected by the crisis, pharmacies, food delivery companies, IT sector and others. The biggest flaw of the anti-crisis package in Serbia was excessive and non-selective assistance to the population,” said the Fiscal Council.
He added that after the first budget allocation of 100 euros to all adult citizens from June 2020, a number of similar measures followed, so “their cost reached a huge 1.9 billion euros”, including the well-known payments in 2022.
Other CEE countries directed assistance to the population, as stated, primarily to vulnerable categories, the unemployed (almost all CEE countries), recipients of the lowest pensions (Croatia, Slovenia, Montenegro, Bulgaria), social assistance beneficiaries (Montenegro, Poland, Lithuania, Albania).
Assistance was also distributed in other countries to cover the costs of absence from work to care for a family member suffering from COVID-19 or due to school closure (Czech Republic, Slovakia, Poland, Lithuania), training and retraining (Croatia, Bulgaria, Northern Macedonia, Lithuania) , for other vulnerable groups (Slovenia, Northern Macedonia, Latvia).
However, the measures also included non-socially endangered residents, regular employees, pensioners with above-average pensions and similar categories, which is why almost four times more was spent on assistance to the population in Serbia in 2020 and 2021 compared to comparable ones. countries.