Report on Work of the Ministry of Finance in the First 100 Days of the Government Belgrade,...
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Transcript of Report on Work of the Ministry of Finance in the First 100 Days of the Government Belgrade,...
Report on Work of the Ministry of Finance
in the First 100 Days of the Government
Belgrade, September 5, 2007
MinisterMirko Cvetkovic, PhD
MinisterMirko Cvetkovic, PhD
State SecretaryJanko Guzijan, MSci
State SecretaryJanko Guzijan, MSci
State SecretarySlobodan Ilic, PhDState Secretary
Slobodan Ilic, PhD
State SecretaryMiodrag Djidic
State SecretaryMiodrag Djidic
BudgetBudget
Macroeconomic and Fiscal Analyses
Macroeconomic and Fiscal Analyses
Fiscal SystemFiscal System
Customs System and PolicyCustoms System and Policy
Financial SystemFinancial System
International Financial Relations
International Financial Relations
Property and Legal AffairsProperty and Legal Affairs
DonationsDonations
Public ProcurementPublic Procurement
Tax AdministrationTax Administration
Customs Administration Customs Administration
Tobacco AdministrationTobacco Administration
Anti-Money Laundering Administration
Anti-Money Laundering Administration
Games of Chance Administration
Games of Chance Administration
Economy and Public EnterprisesEconomy and Public Enterprises
Budget InspectionBudget Inspection
Treasury AdministrationTreasury Administration
Foreign Exchange InspectorateForeign Exchange Inspectorate
Public Debt AdministrationPublic Debt Administration
Free Economic Zones Administration
Free Economic Zones Administration
Appeals ofMisdemeanor Proceedings
Appeals ofMisdemeanor Proceedings
Fiscal policy resultsFiscal policy results
• 2007 Budget and related package of tax laws adopted• Macroeconomic indicators• Memorandum on Budget and Economic and Fiscal
Policy for 2008, with projections for 2009 and 2010, adopted
• Preparation of 2008 Budget, new laws and bylaws, and improvement of the existing ones underway
2007 Budget and tax laws2007 Budget and tax laws• More money from the budget apportioned for employment, boosting
investments, production and export• With adoption of the Budget Law, more resources allocated to AP Vojvodina• National Investment Plan included in current budget expenditure• All contracted liabilities which the government assumed (protocols on
education and health care workers’ wages, contracted projects in NIP) fulfilled
• Persons buying their first apartments exempted from transfer tax and VAT• Transfer tax on real estate trade lowered from 5% to 2.5%• VAT rate on purchase of computers reduced from 18% to 8%• Excise and customs duties on cigarettes aligned with the CEFTA Agreement
•
Budget execution in January-AugustBudget execution in January-August 2007 2007
-10000
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Јanuary Februa March April May June July August
mill
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s o
f d
inar
s
Republic budget inflow Republic budget expenditure Budget surplus/deficit
In millions of dinars
Budget inflow and expenses
January February March April May June July AugustJanuary-August
I OVERALL INFLOW
69.381,3 32.688,6 49.637,7 48.289,2 43.756,5 41.012,2 51.052,2 42.505,1 378.322,8
1. Tax revenues41.508,7 30.398,2 44.829,0 44.383,1 40.798,0 38.489,7 48.370,9 39.905,5 328.683,1
2. Non-tax revenues
27.872,6 2.290,5 4.808,7 3.906,1 2.958,5 2.522,5 2.681,3 2.599,6 49.639,7
II OVERALL EXPENDITURE
38.900,9 38.967,1 46.229,5 42.279,2 36.561,3 40.295,2 44.710,2 47.305,6 335.249,0
1. Current expenditure
36.855,2 36.463,4 41.153,6 37.452,2 34.720,7 38.104,7 42.611,5 43.504,2 310.865,4
2. Capital expenditure
2.045,7 2.503,7 5.075,9 4.826,9 1.840,6 2.190,5 2.098,7 3.801,4 24.383,6
III Budget surplus/deficit (I - II)
30.480,3 -6.278,5 3.408,2 6.010,0 7.195,2 717,0 6.342,0 -4.800,5 43.073,8
Budget inflow and expenditure in January-August 2007Budget inflow and expenditure in January-August 2007
Macroeconomic implications of fiscal Macroeconomic implications of fiscal policypolicy
• Fiscal policy for the past several months of the year had a slightly restrictive influence on domestic demand
• Result of this policy was low core inflation, whose monthly average to date was 0.3% (around 3.7% on the annual level)
• Share of expenditure for public investments increased, as well as for education and health
• Future changes in public investments, including NIP, toward strategic projects were initiated (Corridor X)
Gross Domestic ProductGross Domestic Product, , annual growth ratesannual growth rates
4.6
7.87.4
5.0
6.2
7.0
5.9
5.35.0
5.7
8.2
7.1 7.0
0
1
2
3
4
5
6
7
8
9
Q1 Q2 Q3 Q4 2005 Q1 Q2 Q3 Q4 2006 Q1 Q2 2007*
2005 2006 2007
in %
* projection
Retail prices trendRetail prices trend, , annual growthannual growth
0.0
2.0
4.06.0
8.0
10.0
12.0
14.016.0
18.0
20.0
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2005 2006 2007
Foreign tradeForeign trade
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2000
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2005 2006 2007
IN M
IL E
UR
Export Import Deficit
Share of Republic of Serbia’s public debt in GDP Share of Republic of Serbia’s public debt in GDP from 2000 till July 31, 2007from 2000 till July 31, 2007
30.234.950.253.3
64.369.5
102.2
169.3
0
50
100
150
200
in %
Memorandum on the Budget for 2008Memorandum on the Budget for 2008 • Basic priority of fiscal policy is to secure macroeconomic stability by
reducing public expenditure• Planned reduction of share of public expenditure in GDP for 2008 by
1.7 percentage points • Key measures are:
– limiting wage bill for budget users– reducing public investments from the Republic budget by 20%– reducing expenditure for goods and services from the Republic
budget by 10% – reducing subsidies by 5%
• Continued structural reforms in the area of public finances planned: further tax reforms (changes of laws), improving structure of government spending, promoting the Ministry’s work
Next steps
• 2008 Budget :- preliminary estimates around RSD630bn- aspiring toward a balanced budget
• Talks with all unions concerning wage bill for 2008• Privatization of DDOR by the end of the year• EUR100m recapitalization of Komercijalna banka • CUSTOMS ADMINISTRATION – modernization of
border crossings• TAX ADMINISTRATION – strengthened control of
taxpayers• Restitution Law and property reform
Laws and bylaws underwayLaws and bylaws underway• New laws:
Restitution Law
Public Procurement Law
State Aid Law
Law on Public Property/ Property of Local Self-Governments
Law on Mandatory Insurance in Transportation
Law on Prevention of Money-Laundering and Financing of Terrorism
• Changes and amendments to existing laws:
Law on amendments and changes to Law on Market in Securities
Law on amendments and changes to Insurance Law
Law on amendments and changes to Customs Law
Law on amendments and changes to Corporate Profit Tax Law