Public debt 70 percent of GDP by the end of the year

All the austerity measures implemented by the Government since the beginning of 2017 were not enough to curb the growth of the public debt, which at the end of this year will be higher than last year by around 300 million euros.

The reason for this is the rebalancing of this year's budget, which defined that the state can borrow 950 million euros, most of which goes to repaying earlier loans.

According to the Government's projection, the public debt will reach the level of 2018 billion euros at the end of 3,1, which is 70 percent of GDP, while at the end of last year it was 2,7 billion or 65,1 percent of GDP.

New data on public debt at the end of last year were announced yesterday after the Government session at which the Strategy for public debt management for the period from this year to 2020 was adopted, as well as the report on public debt for last year.

The wandering policy in public finances, especially when it comes to public debt, is indicated by the fact that just two months ago, the Government projected the public debt at the end of 2020 in the Program of Economic Reforms for the period from this year to 2018, which was approved by the EU. year to 66,5 percent of GDP or 2,92 billion euros.

In the Strategy, which "Vijesti" has access to, it is explained that one of the biggest risks for the public debt is the payment of bonds due in 2019, 2020 and 2021 in the amount of one billion euros, so that debt will be refinanced with guaranteed support of the World Bank (WB).

Assistant Minister of Finance Dragan Darmanović explained yesterday after the Government session that negotiations on refinancing are underway and that they will be completed by the end of April.

"The deadline to resolve the transaction with the SB is until the end of April," Darmanović said.

According to the data from the Strategy, external debt makes up the largest part of the debt in the amount of 2,49 billion, of which 241,6 billion is for Eurobonds, 204,6 million is a loan from the Chinese Exim Bank, 138,4 million is the debt that the state has with the International Bank for Reconstruction and development, 100 million with Credit Suisse Bank and 369,5 million with the European Investment Bank. The domestic debt is 114 million, of which the Government owes 87,6 million to the banks, liabilities based on compensation are 87,5 million, debt for government bills 80,4 million and domestic bonds 131 million. Municipal debt is XNUMX million.

Darmanović said that the Government adopted a strategy for debt management for a period of three years and that the goal of that document is to reduce the risk of refinancing.

"An arrangement with the SB for refinancing has been concluded, which will lead to a reduction in obligations and an improvement in the position on the market", Darmanović explained, adding that the 120 million euros that the Government will borrow this year as part of the missing funds will be a deposit for repayment of obligations coming in in 2019.

Darmanović stated that the foreign debt increased the most during the last year due to the withdrawal of money for capital projects in the amount of about 180 million, of which the majority is for the highway.

He also announced that the internal debt increased by about 13 million mostly due to borrowing for budget financing needs. Last year, the government paid off 358 million of debt, 15 million on the basis of foreign currency savings and 98 million was given for interest.

When the government adopted the rebalancing of this year's budget, just 20 days ago, it denied allegations from the URA Citizens' Movement that it would cause an increase in public debt.

They will hedge the highway dollar loan

Darmanović said that the currency risk is also a threat to the public debt, of which the biggest currency risk is the loan taken from the Chinese Exim Bank. That is why the Government, as pointed out by Darmanović, decided to make a hedging arrangement until the repayment of the principal starts in 2021. Hedging means insurance against currency risk for a loan, in the specific case it would be for a highway, it means that the Government is insured against exchange rate differences between dollars and euros.

VAT and excise taxes fill the coffers the most

The government established an analysis of the tax policy in the previous year, which showed that 548,8 million euros were generated from VAT, which is an increase of about 48 million euros compared to the comparable annual period. When it comes to excise taxes, the revenue was 235 million euros (average monthly about 19,6 million), which is an increase of about 46 million for the year.

At the end of last year, the government additionally increased VAT from 19 to 21 percent, as well as most excise taxes.

Collected revenues based on taxes for the use of tobacco products and electroacoustic and acoustic devices for 2017 are symbolic and amount to 456,4 thousand euros, and compared to 2016 (657,3 thousand euros) they are 30,6 percent less. In the structure of the income generated on this basis, the tax for the use of tobacco products participates with 448,5 thousand euros, and the tax for the use of electroacoustic and acoustic devices participates with 7,8 thousand euros.

Municipalities, based on current local revenues (taxes, fees, fees, interest income and fines for untimely payment of tax obligations, income generated by municipal bodies through their activities) in 2017 achieved 133,6 million, which compared to 2016 . year (118,6 million) is an increase of 12,65 percent, which is the result, as explained, of greater involvement of tax municipal services in terms of collection and control of collection of local fiscals (taxes, fees and fees), as well as increased tax discipline taxpayers.