Fiscal Council: Budget for 2020 relatively well planned, excessive salary raises biggest mistake

The proposed budget for 2020 is relatively well planned, but the biggest economic mistake was made in planning an excessive salary raise on the level of the general state by 9.6% on average, the president of the Fiscal Council, Pavle Petrovic, said today.

At the presentation of the assessment of the budget for 2020 and the revised fiscal strategy for 2020-2022, he said that public sector salaries should not have been raised by more than 5.5%.

– Salaries are growing faster than the economic activities, which defines a large part of expenditures within next year's budget in advance – Petrovic said.

He added that the remaining budget was distributed “mostly in a good way”, which is why the assessment is “positive in principle”.

Budget income, as said, is planned well, conservatively, and the changes in the tax policy “are well directed”.

– The total expenditures are planned roughly in the amount of the income, that is, a low deficit of the state budget of 0.3% of the GDP, that is, RSD 20 billion, is planned, which will cause the external debt to drop – Petrovic said.

He said that the public company Elektroprivreda Srbije (EPS) is at a crossroads and that it needs “a strong change in its operation”, along with “an urgent launching of investments” of around EUR 600 million a year, 200 million more than now, that is, by more than 50%.

– From 2015 to 2018, EPS made a profit of around EUR 40 million, and the profitability of similar European companies is ten times as high – Petrovic said and added that the causes of this were bad management, a surplus of employees and excessively high salaries.

Next year, as he said, the average salary in EPS will be RSD 100,000, which he assesses to be very high.

Fiskalni savet Republike Srbije

Akcionarsko društvo Elektroprivreda Srbije Beograd

Fiscal Council

Elektroprivreda Srbije

Pavle Petrović

Fiscal Strategy

revised fiscal strategy

salary raises

surplus employees