Budget as a Social Program

All those who are of the opinion that words are one thing and money is another impatiently expected a new 'democratic budget' of Serbia, before trying to determine what Djindjic's office is in position to do in the course of this year, what this Government really aims at and whether it is ready to launch the pricey, and usually not very popular, process of thorough transition. The first glance on that budget, which is was heedfully structured by the republic Minister of Finances, Bozidar Djelic, calls attention to the assumption that the Government will invest all its power to conduct certain 'reform changes' in the direction of a more efficient accumulation of fiscal revenues - but, that it made no effort to do anything serious about expenditures and, at the same time, to expose itself to loud outcries of hundreds of thousands of budget-financed workers. Serbia will retain the position of a country in which the majority of people are budget dependants - that has, perhaps, spread the notoriety of the Serbs as 'government-subsidised nation'. The only thing that serves to undermine the theory of the 'the state as mother of its citizens' - is the introduction of the system of gross salaries.

Talking about the macroeconomic aspect of our subject, the first thing to be done is to notice that this year's budget of Serbia is really bigger than that last year, since it amounts to 129.4 billion dinars, which means it is 150% bigger than last year (plus the last year's 120% price growth). Although this circumstance has a problematic accuracy, having in mind that the former Marjanovic's Government used to adopt one thing, and carry out the other (i.e. the insecurity as to whether the real budgetary deficit was 3 or 33 per cent) - there remains the fact that the Government has no courage to lecture the people on how they should find their own way of living. Nevertheless, Djindjic does not even conceal that he is not very fond of economic liberalism and demonstrates care for the poor - he gallantly states that he is ready to appropriate the money from the mafia and distribute it to the people. Yet, such a position, which appears pragmatic and resolute, is in fact a figment of one dangerous 'amateurish morality' - though, he probably thinks it is something completely different. Namely, nobody has anything against the idea of confiscating the funds that have been taken from the Serbian state budget by certain inhabitants of Dedinje.

Although Djindjic's budget is more extensive than that Marjanovic's, when things are observed with more interest - one cannot deny the Prime Minister' s remark that this year's budget is 'economical'. Since it is projected to two billion US dollars, than it has to be noted that it is on the same level as back in 1994/5, when Serbia was in the process of remedy from the heavy hyperinflation crisis, based on Avramovic's program. In 1995, for example, the overall budget of Serbia and the FRY amounted to 2.5 billion dollars (excluding Montenegro), whereas today that full amount is 2.4 billion dollars. Afterwards, that part of budgetary consumption grew to over 4 billion dollars, in order to drop to the amount less than this Djindjic's (that it perhaps why the socialist failed at the elections of September 2000). Milosevic's regime seems to have collapsed when his financial perpetuum mobile was caught in crisis.

What is new in the relation of Djindjic-Djelic budget and those old socialist budgets is that the former immediately admitted the 200 million dollar deficit (that is 10%). I fear that the constructors of the budget overestimated the possibility of gathering about 118 million dinars in the following fiscal year. However, presumably out of political reasons, the former authorities used to draw incredible fiscal moves (perhaps to undermine Djukanovic's major business), so by the end of 1999, taxes on tobacco were diminished from 70, 50 and 40% to only 4%, while the sales tax was on tobacco went down from 30 to 17%. Such a budget, which does not smell of tobacco, does not exist in any country of the world. However, even if the price of smoking cigarettes goes up, there is the question whether it is possible to amass the desired amount by means of controlling the import of alcoholic drinks, coffee and petrol, since it has always been the business of creative guys who do not give up easily at all.

I think that the anticipated consumption of 139.4 billion dinars will be short of more than the planned 22 billion dinars - and that the vulnerability of Serbia to the outcome of negotiations with America concerning Milosevic's detainment is more acute than the Government has admitted it. Still, while this edition of VREME is being published, I hope we are going to find out more about the result of Djindjic's 'persuasive visit' to Washington, i.e. about the destiny of the promised American aid worth around 100 million dollars, conditioned by the notorious Hague Tribunal's insistence on Milosevic's arrest and extradition. The principal shortfall of this Serbian budget, which has remained at the level of 'social programs', is not, of course, in this and that taxation instrument, just as its economical aspect is not its chief virtue. The problem lies in the structure of the state management and the system of social rights. Back in 1890, Vukasin J. Petrovic, one of the cruelest tax collectors in the financial history of Serbia, wrote that 'those savings that are meant to resuscitate the financial situation of the country are not planned with the budget'. 'The budget is nothing else but a mirror, in which a picture of the internal state management is reflected', said Petrovic. 'You can turn that mirror round as you like, you can smash in millions of pieces - the picture in front of them will not change its shape and it will reflect itself in each tiny little piece. What should be changed is the picture of the internal management, and that change is probable, from our financial viewpoint, only in the direction of broadening some self-managing functions. ' In a kind of situation like ours, Djindjic did not have courage to 'change the picture' and decentralise state obligations more bravely. Thus, he offered the status quo budget.