Belgrade on water - IMF’s topic

(Photo: Ivana Bezarević)

Finances of Belgrade, quite unexpectedly, became the topic of the talks with IMF, Politika finds out. The Mission, headed by Zuzana Murgasova asked for the meeting with Sinisa Mali and he will, according to Politika’s findings, meet the Fund delegation last week.

The reason for the meeting is a fear of the Washington financiers that some costs may transfer to republic budget and thus increase deficit in governmental budget. One of dangerous precedents in managing fiscal policty is the fact that the budget rebalance implies planned subsidies for GSP. Formally speaking, it is about unplanned payment to the city of Belgrade. Essential, IMF sees it as subsidy. A total of RSD 2 billion was set aside for that purpose from the central budget.

The Fiscal Council has recently warned about this expenditure. As it was stated in the report “the new thing in rebalance is the fact that the country subsidies local public utility companies”. Apart from the fact the expenditure increases deficit of the Repiblic, it ruins the systematic approach to financing in the country, according to which local self-governance is in charge of sustainability of local finances including PUCs, the members of FC warned in their analysis.

Apart from that, the World Bank has recently carried out the analysis on business results of local public utility companies in Serbia and they warned that GSP is getting EUR 60 m of subsidies from the city budget which it mainly spends on salary payments and fuel supply.

The Fund’s officials will also be interested in the Belgrade on water project and the fact that half a billion dinars will be spent for that. When it comes to budget, the figures are not high but the IMF’s Mission members will be interested in hearing about the total project cost. It is estimate the costs could go up to three to four billion dinars.

Apart from that, the topic of the talks with the Fund will be the fact that interest rates and loans costs make the fifth of the city budget.