Serbia loosens 2008-10 budget plans

BELGRADE (Reuters) – Serbia yesterday loosened its budget plans for the rest of the decade, indicating smaller than initially planned fiscal contraction but maintaining growth, inflation and external gap targets, the Finance Ministry said. Maintaining macroeconomic stability remains the key economic policy goal, Deputy Finance Minister Janko Guzijan said in a written statement, after the government amended the memorandum on the 2008-2010 budget policies. «The goals include average GDP growth of 6.3 percent a year and the reduction of inflation to 4 percent in 2010, as well as the lowering of the… current account deficit from 14.7 percent of GDP to 11 percent of GDP in 2010,» he said. «For 2008, the memorandum envisages a cut in public spending by 1.2 percent of GDP, while the share of the Serbian budget in GDP will fall by one percentage point,» Guzijan said. Public spending will be additionally reduced by 0.8 percent of GDP in 2009-2010, he added. Serbia had initially planned to cut public spending by 1.7 percent of GDP in 2008 and by a further 0.5 percent in 2009, as it tries to reduce the foreign trade gap via lower consumer demand.