The Ministry of Finance stated that the Serbian government, at the proposal of this Ministry, adopted the Draft law on amendments to the Law on budget system at its telephone session on Friday.

The amendments adopted refer to provisions that regulate fiscal responsibility. They introduce general and special fiscal rules, with general envisaging that the target annual fiscal deficit in middle term can be 1% of GDP on average.

They also stipulate that the state’s debt, excluding liabilities based on restitution, cannot exceed 45% of GDP.

Special fiscal rules define the change in the structure of public spending, as well as changes in salaries in the public sector and pensions until the share of pensions in GDP reaches 10%, and share of salaries 8%.

The amendments to the Law on budget system also include fiscal rules for local government. Fiscal deficit of the local government cannot exceed 10% of revenues in that year unless it is a result of realisation of a public investment.

The amendments propose setting up a fiscal council, as an independent body whose main task would be to determine whether the Serbian government conducts fiscal policy in line with fiscal rules.

The introduction of fiscal rules will help improve the country’s credit rating and allow for considerable savings, which will lead to a stable, predictable and sustainable fiscal policy.

By adopting these rules the Serbian government will fulfil the obligation it assumed during recent negotiations with the International Monetary Fund (IMF), and with their implementation Serbia will fulfil a condition for EU membership.

This Draft law will be submitted to the Serbian parliament for adoption under emergency procedure.