Serbia’s budget deficit expanded five-fold by the end of February on weaker than planned revenue collections.
The two-month budget shortfall widened to 35.3 billion dinars ($413.3 million) from 6.98 billion dinars in January, according to data published by the Finance Ministry late yesterday. Revenue from the value-added tax fell to 18.6 billion dinars from 36.4 billion dinars the previous month. Collections from excise duties fell 13.2 percent on month.
“February is usually the weakest month for revenue in the year,” the Belgrade-based ministry said on its website.
Serbia wants a precautionary loan deal with the International Monetary Fund and needs to convince the Washington-based lender that fiscal consolidation measures remain on track. The IMF will examine the 2012 budget and the implementation of fiscal measures in 2013 before discussing a new loan. The IMF plans no loan talks if no agreement is reached with the authorities on policy goals.
The widening two-month budget gap translated into a two-month consolidated fiscal deficit of 22.7 billion dinars. This deficit, calculated according to IMF standards, includes spending by local governments and state-controlled pension and health funds.
Fiscal developments in the first two months of the year are “to great extent in line with the plan and show that the full-year consolidated fiscal gap should be very close to the target set by the budget law for this year of 132 billion dinars or 3.6 percent of GDP,” the ministry said. The 2012 fiscal gap was 6.7 percent of GDP.
This year’s fiscal gap will be at least 4.5 percent of gross domestic product and may be as high as 5 percent if unbudgeted aid to unprofitable steelworks or subsidies to information technology companies are included, Pavle Petrovic, the head of the Fiscal Council said March 11.
The council, a three-member body, is appointed by Parliament to oversee government compliance to self-imposed fiscal rules.