Serbia’s budget gap reached 62.3 percent of the full-year target in the four months through April as social-benefit payments doubled and payments of interest rates on past debt more than tripled.
The central government’s deficit expanded to 75.9 billion dinars ($883.7 million) compared with a 122 billion-dinar shortfall planned for the entire year. The consolidated gap, which includes both central and local governments, totaled 60.79 billion dinars in the first four months, the Finance Ministry in Belgrade said on its website today.
The full-year target corresponds to 3.6 percent of economic output, compared with 6.7 percent in 2012. Finance Minister Mladjan Dinkic said on May 10 the gap will likely be 4.5 percent of gross domestic product and his ministry has proposed spending cuts equivalent to one percentage point of GDP to achieve the goal.
The deficit of 49.8 billion dinars in the first three months through March was equivalent to almost 6 percent of quarterly GDP.
The budget figures were released before the International Monetary Fund wraps up its two-week mission to Serbia to check the health of the economy as part of the periodical Article IV consultation. No loan agreement will be discussed, IMF resident representative Bogdan Lissovolik said on May 7.
Serbia had two months to agree on fiscal policy goals that would have paved the way for the start of talks on a new loan with the IMF.
Prime Minister Ivica Dacic’s Cabinet, in office since last July, needs to curb budget spending to keep its fiscal deficit broadly within target. The IMF loan would have unlocked budget support loans from the World Bank and Russia, worth a combined $600 million.