Serb parliament adopts 2013 budget, sees deficit at 3.3 percent

Reuters News
Posted: Dec 01, 2012 4:27 AM

BELGRADE (Reuters) - Lawmakers in Serbia adopted a 2013 budget on Saturday, pledging to slash the deficit to 3.3 percent of national output and return the economy to growth of 2 percent as the government seeks new IMF funding.

The 2013 consolidated budget sets revenues at 956.4 billion dinars ($11.12 billion) and spending at 1,078 billion dinars.

The Balkan country is running a budget shortfall this year of around 6.2 percent of gross domestic product (GDP) as seen in the revised budget, while public debt has ballooned to 60 percent. GDP is forecast to contract 2 percent in 2012.

The government, a coalition of nationalists and socialists, is trying to secure a three-year precautionary loan from the International Monetary Fund (IMF), which froze a 1 billion euro ($1.30 billion) standby deal in January due to over-spending.

Like much of the western Balkans, Serbia has slid back into recession this year on declining trade and investment from the crisis-hit euro zone and a harvest devastated by drought. The country expects public debt to peak in 2013 at 65.2 percent of GDP.

The IMF says Serbia's forecasts are over-optimistic, and the World Bank is predicting more modest growth next year. Unemployment has reached 25.5 percent, and year-on-year inflation in October stood at 12.9 percent.

The government has outlined cuts in public sector spending, subsidies and sovereign guarantees for Serbia's major state-run companies.

The country will also resort to borrowing next year, when it plans a $2 billion Eurobond and a 500 million euro loan from the Luxembourg-based European Investment Bank for investment in small and medium-sized enterprises. It has also sought sovereign loans from Russia and China.

($1 = 0.7689 euros)

(Reporting by Aleksandar Vasovic; Editing by Pravin Char)