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Serbian Government Approves 2011 Budget, Narrows Gap

Serbia’s government approved the 2011 draft budget that narrows the deficit to 4.1 percent of gross domestic product, Finance Minister Diana Dragutinovic said.

The draft, which must be approved by parliament, sees a shortfall of 140 billion dinar ($1.7 billion), Dragutinovic told reporters in Belgrade today. Revenue is set at 724 billion dinar with expenditures seen at 845 billion dinar, she said.

The Balkan nation took a 3 billion-euro ($4.1 billion) stand-by arrangement with the International Monetary Fund, whose conditions for the country include keeping the 2010 budget deficit under 4.8 percent of GDP. The approval comes a week before the IMF meets to discuss the next tranche of the Balkan nation’s bailout loan.

“The draft is in line with the IMF program and we hope to hear good news from the fund,” she said.

Serbia is emerging from its worst recession in a decade and the government is trying to reduce spending and boost tax collection without cutting too many social benefits.

The budget draft forecasts economic growth of 3 percent and a current-account deficit of 8 percent of GDP, Dragutinovic said.

The government will also keep subsidies for Fiat SpA, as agreed with the Italian carmaker, on an expansion of its Serbian production facility.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: Alan Crosby at acrosby1@bloomberg.net

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