RSD 30 billion more for infrastructure in 2019 budget

The 2019 budget envisages a considerable increase in public investments – RSD 30 billion more for the realization of infrastructural projects.

It also entails a reduction of the labor taxation through the abolition of contributions for unemployment insurance, paid by employers, thereby reducing the tax on the average net salary from 63% to 62%.

These are some of the features of the Budget Preparation Guidelines for 2019 and Projections for 2020 and 2021, adopted by Serbian Finance Minister Sinisa Mali.

The aim is to incite growth and employment and thereby reduce the burden on the economy. The plan is also to lower parafiscal charges by abolishing certain compensations through regulations in this field, and the estimated revenue loss thereby amounts to around RSD 2 billion.

The plan also includes doing away with the so-called crisis measures which came into effect as part of the fiscal consolidation program. The law on the temporary reduction of pension is abolished, with an increase of the lowest pension by 5% compared to the pensions paid in September 2018. The effects of those measures in 2019 are larger total expenditures for pensions in the amount of RSD 40 billion.

The law on the temporary reduction of salaries, that is, the parts of it that obligated public companies (state and local ones) to pay the amount of savings made due to the reduction of salaries, is to be abolished in phases. Non-taxable income will thereby be lower by around RSD 8.5 billion.

Macroeconomic projections from 2019 till 2021 put the cumulative rate of the real growth of the GDP at 11.9%, based primarily on an increase of local demand. The growth is down to the consistent growth of investments and the increase of personal consumption. The slightly lower growth rate in 2019 is a consequence of the high bar in agriculture and construction thanks to the production in 2018.

The medium-term fiscal policy orientation is toward maintaining a low deficit, a further reduction of the public debt and the support to economic growth.

Ministarstvo finansija Republike Srbije

Sinisa Mali

Budget Preparation Guidelines for 2019

budget projection

infrastructural projects

reduction of tax burdens on labor

abolition of contributions for unemployment insurance on employers

budget savings

reduction of parafiscal charges

abolition of compensations

public companies

real GDP growth

agriculture

construction

personal consumption