ECONOMY

Serb finances disputed

BELGRADE – A politician vying to become Serbia’s next prime minister said on Wednesday that the outgoing government had misrepresented the state of public finances and inflated 2006 budget figures to fake a surplus. Earlier this month, the outgoing cabinet of Prime Minister Vojislav Kostunica reported a preliminary 30.3 billion dinar (-379 million) budget surplus, double its original forecast. The figure included 28.25 billion dinars in revenues from the sale of a mobile telephony licence to Norway’s Telenor. Bozidar Djelic, the Democratic Party’s candidate for prime minister, said the inclusion of that item was an intentional mistake to boost numbers. The party had been in opposition in parliament during Kostunica’s rule. «Serbia posted no budget surplus in 2006 because the mobile telephony license was wrongly included in regular revenues,» Djelic, a former finance minister, told reporters in a break from the new parliament’s first session after an inconclusive January 21 election. «Also, traditional sources of budget revenue were 6.5 percent below planned,» Djelic added. Djelic’s Democrats are expected to form a coalition with Kostunica’s party but personal rivalries and differences in policy are making any speedy deal unlikely. The pro-Western Democrats are seen as more efficient and more likely to work closely with bodies such as the International Monetary Fund, which has also criticized the inclusion of the item in the budget. Djelic said the new government would propose a new 2007 budget rather than adopt Kostunica’s draft, which envisages a 0.7 percent budget surplus. «Their draft budget overestimates the revenue side by some 30 billion dinars and the planned spending will also have to be reviewed,» Djelic said. Until the new government is formed and adopts a budget, Serbia is using the so-called temporary financing, which allows only basic spending that must not exceed 25 percent of what they spent in the previous year. The IMF has said the new government should back strong fiscal and structural policies and commit to low inflation in order to support the work of the central bank, which managed to bring inflation to a 15-year low of 6.6 percent in 2006.