New measures and new debts: How much are we in debt and how is Bulgaria related

NEWS 10.06.202317:09 0 komentara

The new measures bring a cost of around 550 million euros and they cannot be implemented without borrowing from the state at very unfavorable rates, according to the Fiscal Council. There is money, we will not go into debt because of salary and pension increases, says Siniša Mali. And where are we now? Pročitaj više

According to official European statistics, Estonia and Bulgaria are the least indebted countries in the EU.

Serbia’s eastern neighbour, according to their finance ministry, has a public debt of 19.37 billion euros, which is 20.5 percent of Bulgaria’s GDP.

Serbia’s public debt is 34.94 billion euros, which is 50.6 percent of its gross domestic product.

Measured ‘per capita’, the state owed each resident of Bulgaria 2,971 euros.

Serbia, on the other hand, owed each of its residents 5,256 euros, which is the amount of public debt per capita.

After the government announced an increase in salaries and pensions and new one-time grants, experts warned that Serbia would have to borrow again in the coming period.

This will affect the quality of life in the coming years, and the public debt is growing month by month.

The announced measures will burden the state budget by around 550 million euros, according to estimates by the Fiscal Council.

The Minister of Finance, on the other hand, says – there is money, and the measures in 2023 will cost 23 billion dinars (approx196 million euros).

Although the minister says that the measures have been planned for months, the Fiscal Council was never informed about it.

“The conduct of fiscal policy from today to tomorrow, based on the discretionary decisions of state officials, is already a very serious problem of Serbia’s public finance,” said the Fiscal Council.

The measures, according to the council, are contrary to what is written in the Fiscal Strategy and such borrowing was not foreseen.

Nikola Altiparmakov, a member of the Fiscal Council, estimates that we are not threatened by an immediate crisis due to the new measures, but we will have a reduction in the standard of living in the coming years because we will have to pay that debt off.”

Although the government claims that the deficit in the budget is much smaller than planned, experts remind us that you cannot save on something you do not have.

“The problem is that we have a deficit in the budget and every new grant is given from the public debt, that is, it has to be borrowed, and the problem is that the interest rates are getting higher and higher,” economic journalist Milos Obradovic haw warned.

He also said that more was allocated for interest in the first four months of this year than for social benefits.

New borrowing will only worsen Serbia’s position, loans will be more expensive.

The Fiscal Council indicates that the state currently borrows on the financial market at a high interest rate of around 6.5 percent.

And, with some of the latest loans with a variable interest rate, it reaches around eight percent, the Fiscal Council said.

Borrowing is not the only problem, but also the fact that the state often distributes money indiscriminately, which can affect inflation.

“When you give money so linearly, without any criteria, you accelerate inflation. The main result that we can expect is the acceleration of inflation,” said the expert.

Finance Minister Sinisa Mali himself told the public broadcaster RTS that the National Bank of Serbia raised the reference interest rate “to balance the increased amount of benefits for our citizens.”

The minister said that inflation would be around 10 or 11 percent on average this year.