Serbia's parliament adopts 2021 budget, sees growth at 6pc

BELGRADE: The Serbian parliament on Thursday adopted the Balkan country's budget for next year, projecting growth at 6% of national output and a 3% deficit following a downturn this year caused by the coronavirus crisis.

The spending plan includes a 5.9% increase in pensions and 6.6% increase in minimum wages, as well as a 5% rise of salaries of medical workers.

"The budget is development-oriented," Finance Minister Sinisa Mali told deputies on Monday.

A total of 330 billion dinars ($3.40 billion) would be spent on capital investments, such as infrastructure.

The deficit would be covered by borrowing at home and abroad. Serbia's revised budget for 2020 sets the deficit at 8.9%.

The budget sees economic growth next year at 6%, following a 1% contraction expected in 2020. The International Monetary Fund said Serbia's economy would shrink by 1.5% in 2020 and return to growth of around 5% in 2021.

The government's Fiscal Council advisory body criticised budget as overly optimistic, warning that growth could be lower due to uncertainties related with the COVID-19 pandemic.

The vote in the 250-seat parliament, which is almost entirely controlled by the ruling coalition led by the Serbian Progressive Party, was largely a formality.

By the end of 2020 Serbia, a candidate to join the European Union, must also adopt a plan on how to use budget funds to restructure country's indebted flag carrier Air Serbia in 2021. The plan must be approved by the European Commission.

Air Serbia, which is 49% owned by the United Arab Emirates airline Etihad Airways, has been hard hit by the effects of the COVID-19 pandemic. On Nov 13, Serbia's daily Danas reported that Air Serbia had offered severance packages to around 300 people, or 20% of its workforce.