Economist Stojan Stamenkovic said on Tuesday there were two risks to fiscal discipline in 2012, first that the budget deficit could be higher than expected and for the maximum limit of the debt, 45 percent of the GDP, to be exceeded by the end of the first half of the year.

Presenting the latest issue of Makroekonomske analize i trendovi at the Belgrade Institute of Economics, he stated the budget could be described as debtor's because of violations to fiscal discipline and lack of reforms and fiscal adjustment. The budget revenue is overrated, particularly the expected revenue from the VAT and income tax, he remarked.

There is a possibility for Serbia to reach the debt limit of 45 percent of the GDP by the end of the first half of 2012, which narrows down the options for new debt, he noted.
"Our projections state that we are going to reach that limit and breach it sometime around the end of the first half of the year," Stamenkovic pointed out.

He fears that loan payments will exceed new loans during the next three years. The ratio between interest and principal payments is currently at around 35 percent, and the European standard is 25 percent, he said.

Such a high rate can be present for a year or two, but not longer than that, he stated, adding that those trends could result in a credit balance deficit of EUR 2.5 billion, which might be covered through money sent by Serbian citizens living abroad or through direct foreign investments.