The sitting was attended by Minister of Finance Sinisa Mali and associates, as well as Fiscal Council President Pavle Petrovic and representatives of the National Assembly Budget Office.

Committee Chairperson Dr Aleksandra Tomic said that the Fiscal Council had submitted its assessment of the Republic of Serbia 2019 Budget Bill to the Committee, as had the National Assembly Budget Office.

The Committee members accepted the Chairperson’s proposal to complete a joint discussion on all the items on the agenda.

The Committee Chairperson also informed the members that the Committee had received the reports of the Committee on the Economy, Regional Development, Trade, Tourism and Energy, the Committee on Labour, Social Issues, Social Inclusion and Poverty Reduction, the Agriculture, Forestry and Water Management Committee and the Health and Family Committee on the 2019 Budget Bill in the parts concerning their purview with the proposal that the Committee on Finance, State Budget and Control of Public Spending accept the Bill.

The Committee went on to review the Bill on Central Registry of Compulsory Social Insurance, Proposal of the Decision to grant consent to the Decision amending the Fund for Social Insurance of Military Insured 2018 Financial Plan, Customs Bill, Republic of Serbia 2019 Budget Bill, with its accompanying Proposal of the Decision to grant consent to the Republic Pension and Disability Insurance Fund 2019 Financial Plan, Proposal of the Decision to grant consent to the Republic Health Insurance Fund 2019 Financial Plan, Proposal of the Decision to grant consent to the National Employment Service 2019 Financial Plan and the Proposal of the Decision to grant consent to the Fund for Social Insurance of Military Insured 2019 Financial Plan, Bill amending and modifying the Budget System Law, Bill on Customs Service, Bill amending and modifying the Law on Public Property, Bill amending the Law on Republic Administrative Fees, Bill amending and modifying the Law on Games of Chance, Bill amending and modifying the Law Tax Procedure and Tax Administration, Bill amending and modifying the Public Debt Law, Bill amending the Law on Restitution of Confiscated Property and Compensation, Bill amending and modifying the Law on Tobacco, Bill amending and modifying the Personal Income Tax Law, Bill amending and modifying the Law on Compulsory Social Insurance Contributions, Bill amending and modifying the Corporate Income Tax Law, Bill amending and modifying the Property Tax Law, Bill on Fees for the Use of Public Goods, Bill on the Confirmation of the Guarantee Agreement (Technical Passenger Station (TPS) Zemun Project – Phase 2) between the Republic of Serbia and the European Bank for Reconstruction and Development, Bill on the Confirmation of the Government Concessional Loan Agreement on Belgrade Bypass Project – Construction of Highway E70/E75, Section: Bridge Over Sava River Near Ostruznica – Bubanj Potok (Sectors 4, 5 And 6) between the Government of the Republic of Serbia Represented by the Ministry of Finance as Borrower and the Export-Import Bank of China as Lender, Bill on the Confirmation of the Framework Agreement between the Government of the People's Republic of China and the Government of the Republic of Serbia on Provision of Government Concessional Loans by the People's Republic of China to the Republic of Serbia, Bill amending and modifying the Law on Temporary Regulation of Salary and Other Steady Income Calculation and Payment Bases of Public Fund Users, Bill Granting Guarantees by the Republic of Serbia in favour of Banca Intesa a.d. Beograd, for Payment of Liabilities of Public Enterprise “Srbijagas“ Novi Sad on Long Term Loan Agreement for the Construction of Gas Distribution Aleksandrovac-Brus-Kopaonik-Raska-Novi Pazar-Tutin (Phase II), Bill Granting Guarantee by the Republic of Serbia in favour of Societe Generale Bank Serbia, a.d. Belgrade, Komercijalna Banka a.d. Belgrade, Postanska stedionica a.d. Belgrade, OTP Bank Serbia a.d. Belgrade and Vojvodjanska Banka a.d. Novi Sad on Loan Agreement for the Construction of Pipeline on the Territory of the Republic of Serbia from the border with the Republic of Bulgaria to the border with Hungary and other countries neighbouring the Republic of Serbia and the Bill on the Confirmation of Annex 1 to the Railway Nis – Dimitrovgrad Finance Contract of 31 January 2018, between the Republic of Serbia and the European Investment Bank.

The bills were presented by Minister of Finance Sinisa Mali who said that the budget and set of reform bills aim to raise the citizens’ living standards and contribute to the economic progress of the country. He said that the budget is balanced and characterized by a pronounced social aspect aimed toward raising the citizens’ living standards and has record allocations for capital investments with the aim of raising GDP and unburdening the economy. The 2019 Budget Bill proposes 1,246.2 billion RSD in overall income and 1,269.1 billion RSD in expenses, which is a 22.9 billion RSD of deficit i.e. 0.4% GDP. Growth projections were conservative with a 3.5% growth and 2.3% inflation. The budget proposal is a continuation of the reforms begun in 2014, said Mali adding that the nine months of this year yielded a 4.4% economic growth with a 11.9% unemployment rate and 55.6% GDP in public debt. This year’s surfeit will be 0.6% of GDP, and the 2019 planned deficit 0.5%, said Mali.

He said that the 2019 Budget Bill plans to unburden the economy, drop the fiscal consolidation crisis measures and is characterized by a higher living standard, bigger allocations for capital investments and a set of reform laws. The rise in pensions and salaries is 1.3% GDP, with the lowest pensions being increased by 5% i.e. 181.4 billion RSD being allocated for pensions which is 35 billion RSD more than in 2018. The total pension fund will be 563 billion RSD, said Mali. Public sector salaries will go up by seven to 12% for which 294.4 billion RSD was allocated, which is 22 billion RSD more than in 2018. The Minister said that as of 1 January 2019 minimum will be 155 RSD per hour i.e. 27.022 RSD. The capital investment allocations are 30% higher than in 2018 - 165.5 billion RSD, with the total amount being 220 billion RSD with the local self-government and indirect budget beneficiaries’ capital expenses. The funds are intended for the construction of roads, railway, hospitals, schools and other infrastructural projects, said Mali. The set of reform laws is the third element contributing to the unburdening of the economy one of the measures being reducing income tax and parafiscal charges. The results achieved in 2018 make it possible to pass this set of reform laws to raise the competitiveness of our economy, concluded the Minister of Finance.

Fiscal Council President Pavle Petrovic gave a brief assessment of the 2019 Budget Bill saying that the deficit is fiscally responsible and minimal, well-suited to the Serbian economy. This deficit will make it possible to reduce the public debt to GDP by 2%, said Petrovic. He went on to say that the deficit should be kept as a medium-term goal in coming years because it is structurally sustainable. The planned income and expenses are realistic and the Fiscal Council expects the deficit to be realized as planned, said Petrovic. Speaking of the flaws in the 2019 Budget Bill, Petrovic said that it is not sufficiently oriented toward economic growth which is the country’s main problem. He opined that Serbia’s growth lags behind that of the countries of Central and Eastern Europe, which has a direct impact on the citizens’ living standard. The fiscal area in the Budget Bill can be used for a considerable decrease in allocations for taxes and contributions from 65 to 60% and investments into infrastructure could be raised by 300 billion. Petrovic said that the increase in public sector salaries is not justified, because the average net salary is to go up by 9%, while in the private sector that number is just 5%. Speaking of the rise in pensions, Petrovic said that it complies with the GDP growth and the Fiscal Council believes that the existing law on the pension and disability insurance fund should be annulled and we should go back to adjusting the pensions to the growth rate. Petrovic also said that the relevant bodies need to adopt national budget end-of-year financial statements for the previous year.

Following a longer debate the Committee members accepted all the bills.

The sitting was chaired by Committee Chairperson Dr Aleksandra Tomic and was attended by the following Committee members and deputy members: Goran Kovacevic, Zoran Bojanic, Momo Colakovic, Srbislav Filipovic, Veroljub Arsic, Dusan Bajatovic, Milorad Mircic, Sonja Vlahovic, Goran Ciric, Olivera Pesic, Sasa Radulovic, Zoltan Pek, Vojislav Vujic, Dr Milorad Mijatovic, Milan Lapcevic and Zoran Despotovic.