The Committee considered, in principle, the Bill amending the Republic of Serbia 2017 Budget Law and the Proposal of the Decision to grant consent to the Decision amending and modifying the Republic Pension and Disability Insurance Fund 2017 Financial Plan, Proposal of the Decision to grant consent to the Decision amending the Fund for Social Insurance of Military Insured 2017 Financial Plan and the Proposal of the Decision to grant consent to the Decision amending the National Employment Service 2017 Financial Plan.

The Committee members also considered, in principle, the Bill amending and modifying the Budget System Law, Republic of Serbia 2018 Budget Bill, with its accompanying Proposal of the Decision to grant consent to the Republic Pension and Disability Insurance Fund 2018 Financial Plan, Proposal of the Decision to grant consent to the Republic Health Insurance Fund 2018 Financial Plan, Proposal of the Decision to grant consent to the National Employment Service 2018 Financial Plan and the Proposal of the Decision to grant consent to the Fund for Social Insurance of Military Insured 2018 Financial Plan, Bill amending and modifying the Value Added Tax Law, Bill amending and modifying the Corporate Income Tax Law, Bill amending and modifying the Law on Payment Deadlines in Commercial Transactions and the Bill amending and modifying the Personal Income Tax Law.

The Committee went on to consider the Bill amending and modifying the Law on Public Property, Bill amending and modifying the Law on Compulsory Social Insurance Contributions, Bill amending and modifying the Law on Republic Administrative Fees, Bill amending and modifying the Law on the Settlement of Public Debt of the Republic of Serbia arising from Unpaid Citizens’ Foreign Exchange Savings Deposited in Banks with Headquarters on the Territory of the Republic of Serbia and Branch Offices on the Territory of Former SFRY Republics, Bill on the Confirmation of the Loan Agreement (Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option) between the Republic of Serbia and the International Reconstruction and Development Bank and the Bill on the Confirmation of the Loan Agreement (Enhancing Infrastructure Efficiency and Sustainability Program) between the Republic of Serbia and the International Reconstruction and Development Bank.

The Committee also considered, in principle, the Bill on Preventing Money Laundering and Financing of Terrorism and the Bill amending and modifying Law on Restrictions on Disposal of Property with the Aim of Preventing Terrorism.

The Committee members accepted the proposal of Committee Chairperson Dr Aleksandra Tomic to complete a joint debate on all the items on the agenda, which were then presented by representative of the submitter Minister of Finance Dr Dusan Vujovic who said that a great many of the proposed bills are part of the three-year programme with the IMF and cover minor amendments, then there are some bills concerning the realization of the programme of reforms and a couple of operative bills concerning the ratification of previously signed loans.

Speaking of the 2018 Budget Bill, the Minister said that the planned revenue of 1,178 billion RSD and expenditure of 1,207 billion RSD give a 0.6% expected GDP in deficit or 0.7% at the state level which is a record low. The projection is based on the realistic 3.5% growth with 2.7% GDP deflator which is the expected inflation for next year. The Minister said that this year would end with a record high surfeit of 0.7% GDP which will be available for non-recurring expenses. The Minister said that public expenditure follows the GDP dynamics and would be 25.4% of the GDP and there would be no increase in its participation in the GDP (8.3% GDP goes to income and for the increase in salaries and pensions). The Minister said that the 128.3 billion RSD has been secured for investment at the level of the republic budget i.e. 2.7% GDP or 3.6% GDP at the level of the state. The policy of subsidizing which is in itself developmental in character would be continued and the funds are expected to be enough to allow for the realization of capital projects. Minister Vujovic said that the effects of the fiscal policy are best seen in the reduction of interest rates so the funds allocated for this purpose were reduced by 16 billion RSD and any new loans would be taken at a much lower interest rate, below 2%.

Fiscal Council President Pavle Petrovic presented the analysis of the 2018 budget proposal saying that what is good in it is the small and sustainable deficit and the fact that this level could be maintained in the years to come is even better. The low deficit and balanced budget would enable the drop in debt compared to the country’s economic power by about 2 percentage points i.e. from 65 to 63% in the next year. The Fiscal Council still believes the debt to be too high, and its reduction would lead to economic growth, said Petrovic. He added that the budget revenue and expenses are realistically planned and commended the positive changes in the expenditure structure in favour of investment.

Petrovic’s objections to next year’s budget proposal mainly concerned the fact that the temporary measures from the beginning of the consolidation are kept and remain in force which the Fiscal Council considers unjustified. The Fiscal Council believes that there is room for expenditure, first and foremost to rescind the temporary pension cut. Then, the ban on employment in the public sector remains in force but the levels of employment in the public sector correspond to European standards so any additional cuts could only make things more difficult in the sector. The Fiscal Council believes that the income in the public sector exceeds the country’s economic power and the growth of the salary fund should be slower. The Fiscal Council believes the increased investment to be positive, with state level growth of 3.6 GDP and at the medium term 4.5 GDP. However, investments into health care, education and environmental protection are lacking, said Petrovic. And the last bit of criticism concerned procedure – not submitting proposals on the time and the need to pass an end-of-year budget account to be reviewed at the National Assembly. Petrovic said that the Fiscal Council is against passing the Bill amending and modifying the Personal Income Tax Law and the Bill amending and modifying the Law on Compulsory Social Insurance Contributions because it believes it might lead to tax fraud.

Finally, representatives of the Budget Office presented their analysis of the 2018 budget proposal.
Following a lengthy debate the Committee members accepted all the bills and decision proposals.

The sitting was attended by the following Committee members and deputy members: Momo Colakovic, Veroljub Arsic, Dr Milorad Mijatovic, Sonja Vlahovic, Zoltan Pek, Olivera Pesic, Srbislav Filipovic, Zoran Bojanic, Goran Kovacevic, Sasa Radulovic, Zoran Krasic, Milorad Mircic and Goran Ciric.

The sitting was chaired by Committee Chairperson Dr Aleksandra Tomic.