The possibility of reaching the fulfillment of Maastricht convergence criteria in Serbia

Abstract

This paper analyzes the fiscal position of the Republic of Serbia as well as the ratio between its indicators and reference values anticipated by the Maastricht convergence criteria. According to the mentioned criteria, the public debt must not exceed 60% of the GDP, whereas the budgetary deficit must not exceed 3% of the GDP, even though the majority of countries have set up stricter criteria in order to provide greater economic stability. The Republic of Serbia strives not to only fulfill the criteria set for the public debt be kept under 60% of GDP, but to decrease it to 45% of GDP. Taking into consideration the fiscal aggregates before and after the application of the fiscal measures in the following three year period it is shown that the measures should be applied further than this timeframe in order to fulfill the criteria needed to join the European union. Based on the predictions shown in this paper it is clear that the Republic of Serbia will not be able to fulfill these criteria if it does not conduct a restrictive fiscal policy, which is inclusive in responding to the question of a structural deficit, a tax reform and an overall reform of the public sector, which is a good way to achieve the results predicted by the Maastricht convergence criteria, although not in the timeframe set by the Government of the Republic of Serbia.

Keywords

• budgetary deficit
• fiscal strategy
• Maastricht fiscal criteria
• public debt