Serbia budget revamp raises deficit to 6.9% of GDP to mitigate pandemic effects

Credit: REUTERS/MARKO DJURICA

The Serbian parliament adjusted the budget on Thursday, increasing the deficit to 381.7 billion dinars ($3.91 billion) or 6.9% of economic output, up from a previously planned 3%, to mitigate effects of the coronavirus pandemic and finance growth.

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BELGRADE, April 22 (Reuters) - The Serbian parliament adjusted the budget on Thursday, increasing the deficit to 381.7 billion dinars ($3.91 billion) or 6.9% of economic output, up from a previously planned 3%, to mitigate effects of the coronavirus pandemic and finance growth.

The 2021 budget revamp adopted by the 250-seat assembly sets revenues at 1,356.2 billion dinars and revenues at 1,768.4 billion dinars.

"As many as 7.2 percent of GDP, ... will be allocated for capital investments" this year, mainly in infrastructure and energy, Finance Minister Sinisa Mali said ahead of the vote in parliament, which is almost entirely dominated by allies of President Aleksandar Vucic.

Serbia, a candidate for European Union membership, has already launched a 2.5 billion euros-worth package to ease the economic impact of the coronavirus.

Belgrade plans to finance the higher deficit by borrowing, which would raise country's debt to around 60% of gross domestic product (GDP), up from 58.2% currently, Mali said.

In January, Serbia tapped international markets with a 1 billion euro 12-year eurobond with the yield of 1.92% and 1.65% annual coupon.

The International Monetary Fund expects that Serbia's economy to grow about 5% this year, following a 1.1 contraction in 2020. The Serbian government expects growth of around 6% of GDP this year.

($1 = 97.6900 Serbian dinars)

(Reporting by Aleksandar Vasovic; Editing by Peter Graff, William Maclean)

((aleksandar.vasovic@thomsonreuters.com; +381113044904;))

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