Serb 2012 Fiscal Gap to Fall to 6.1% of GDP, Dinkic Says

Serbia’s full-year fiscal gap will be narrower than the official target as the government holds back on spending this month, Finance Minister Mladjan Dinkic.

Serbia’s 2012 fiscal deficit will amount to 6.1 percent of gross domestic product, compared with a targeted 6.7 percent of GDP, or 203.6 billion dinars ($2.35 billion), Dinkic told reporters today in Belgrade. The December shortfall may be below 40 billion dinars after a 161.3 billion-dinar gap in November.

“This shows that our forecasts for 2013 revenue and spending are realistic,” he said.

Prime Minister Ivica Dacic’s Cabinet is trying to persuade the International Monetary Fund that the 2013 budget is feasible and the government is able to adhere to the budgeted fiscal targets before meeting the lender next spring for a second round of talks on a new loan program.

The government plans to spend about $12.5 billion and collect revenue worth $11 billion next year, cut state aid to unprofitable public companies.

It also promising to forgive default interest on debts owed by corporate tax payers and enforce a new property reporting plan aimed at collecting a 20 percent tax from anyone whose holdings exceed their reported income, Dinkic said.

To avoid financing state enterprises, Serbia will invite bidders next month to buy drugmaker Galenika AD, after the company accumulated 170 million euros in losses and will need 50 million euros above sales revenue next year to survive.

The government also hopes to sell sole steelworks, Zelezara Smederevo, to NPO Uralvagonzavod OAO as “talks are going in the right direction” and “we believe a contract could be signed in the first quarter” of 2013, he said.

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

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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