Parliament approved the draft of Serbia’s 2010 budget

Belgrade, Dec. 23, 2009, The Serbian Parliament approved on Monday by a single vote the Government’s draft budget for next year. Needing a minimum of 126 votes, 127 MPs voted in favor of the bill. The representatives of the Alliance of Vojvodina Hungarians (SVM) voted against the draft, and it was uncertain even Monday morning whether the ruling coalition could scrape together the necessary number of votes to approve the budget. Two independent MP’s and Riza Halimi, representing ethnic Albanians from southern Serbia, came to the rescue of the 124 ruling coalition MPs. The draft submitted by the Government and approved by the MPs estimates income will be EUR 6.84bn, spending will be EUR 7.96bn, and the resulting deficit will be EUR 1.12bn. It remains to be voted on the 242 amendments submitted to the draft
Also on Monday the Board of Directors of the International Monetary Fund (IMF) was suppose to discuss a revision of its loan arrangement with Serbia. This meeting have been canceled due to the snow-storm which hit Washington DC area over the weekend.
According to the earlier statement from the Governor of the National Bank of Serbia Radovan Jelašić, the budget had to be adopted on Monday so the IMF Board of Directors can discuss its arrangement with Serbia. "If we miss this chance, the IMF will decide about the loan arrangement in late January," Jelašić was quoted as saying to the press.
However, Milojko Arsić, an adviser to the Prime Minister, says that all conditions were already met for IMF approval once the budget was adopted by the Government and sent to Parliament for consideration. Therefore he believes that the IMF will confirm its arrangement with Serbia. “This means that the fiscal policy would have to be in accordance with the arrangement. If the budget were not to be adopted for some reason, it would have to be adopted by a reasonable deadline in order to meet the basic elements of the IMF agreement,” he stated.
Key issues such as RSD 107bn deficit, maintaining the VAT rate and an estimated increase in the GDP of 1.5 percent have already been agreed with the IMF. There is, however, a dispute regarding freezing pensions, which constitute the largest expenditure in the budget. This issue is also one of the biggest political problems for the ruling coalition. Loosing the support of retirees who make one of the largest voting blocks in Serbia would lead to defeat in any new elections.