The State Topples the Dinar

A year ago, in December 1994, three draft budgets appeared (the FRY, Serbia and Montenegro) standing at around three billion dollars in real terms. Now the planned budgets for next year are exactly four billion dollars. Compare last year's plans to this year's and you see that Serbia's budget has grown from two to 2.5 billion dollars, the Montenegrin from 200 million to 260 million and the federal from 870 million to 1.28 billion.

Continue with the dollar amounts and use Tomislav Z. Nikolic's methods and the Yugoslav public consumption is easily calculated by simply multiplying Serbia's budget by 4 to reach the amount of 10 billion dollars in planned public spending in 1996, compared to eight billion dollars of this year's social product and the planned 13 billion next year.

Inflation has reduced the current budgets by about 35% in real terms to less than two billion with a total of four billion for public expenditures (the annual inflation rate gradually reduced the budget in the first half of the year and more rapidly in the second half). How much the inflation that has been caused by the too great state appetites will reduce the budgets in real terms remains to be seen.

Every company director has already gotten instruction from the seats of power: if you want to stay raise your prices by 140% since the state has just said it has raised its cost in dinars by that amount.

Interestingly, the highest government spokesmen said their priority in preparing economic policy for next year is "keeping prices stable along with the exchange rate through measures and mechanisms based on a market economy" (statement from a cabinet meeting on December 12).

Start from the premise by the Belgrade Institute of Economic Sciences that this year's social product will realistically stand at eight billion dollars while the authorities expect to raise it to 13 billion (62% growth) and it turns out that it's impossible to achieve that without upsetting prices and exchange rates to raise the budget by 100%. Hopes of raising the social product in the first year without the sanctions by a double digit growth rate are unrealistic.

The federal government pushed its 1996 budget (5.891 billion dinars) through parliament rapidly along with a proposal to rebalance this year's budget from 2.128 billion dinars to 2.578 billion. That means that next year it will have a nominal budget rise of 128.5%. Part of that budget is for the army (4.215 billion or around 900 million dollars) which is allegedly 30% less than what the army asked for. Everyone agrees that the army is the biggest burden on the federal budget (75%) but some recall that that budget is three or four times lower than Croatia's. That's part of the story that this year 10.8 million Yugoslavs made eight billion dollars while two million Slovenians made 14 billion.

The Serbian government asked its parliament to approve a republican budget of 11.995 billion dinars compared to this year's of 4.995 billion. They want to raise next year's budget by 140% and they got a rise of 75% this year. That budget includes 2.1 billion dinars (500 million dollars) for the police.

About 42% of the budget will cover the salaries of state employees (five billion dinars) and 1.356 million people who enjoy welfare in one form or another (2.3 billion) Add to that the fact that around one million employees in the agricultural industry have an interest in raising the agriculture budget by about one billion. Then there's the 100,000 people in big companies who will get the 660 million dinars planned for interventions in the economy.

All in all, some four million people live off public spending in Serbia.

Pension funds in the republic plan 7.4 billion dinars in expenses next year, health care 4.84 billion etc. Overall in Serbia, public spending is estimated at 29.6 billion dinars or 48% of the planned social product.

reports from Montenegro said the government there has a budget proposal of 1.1 billion dinars or 120% more than last year.

When Tomislav Z. Nikolic (in Nasa Borba) added up all those budgets and got the sum of 18.8 billion dinars and added to that city budgets and permanent budget users he got 25 billion without pensions, health care and employment funds which bring the total up to 45 billion dinars or 75% of the expected social product of around 60 billion dinars.

the opposition has now understood that the budget issue is the main political issue and has qualified the draft budgets as the death of the new economic program and a state duel with the Avramovic program II. Miroljub Labus of the Democratic Party asked the federal parliament to reduce all budgets by 25% while his party deputies in the Serbian parliament have called for a budget cut from 12 to eight billion dinars.