The DSS will urgently restrain the spending of the state administration by a strict control, which means submitting regular final accounts of the state organs, of the municipalities, and of the public companies in state ownership. Public spending will be brought to the level of development of the economy, and its rise will be conditioned by higher investment in capital projects and support to the industry.
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I Stable Budget
Deficit growth, with declining investments, industry and agriculture subsidies and a real decrease in salaries and pensions is unacceptable. It is therefore necessary to adopt as soon as possible the concept of a frugal state administration.
Budgets should be prepared for a period of three years, to ensure budgetary and macroeconomic stability and implement the necessary reforms in the field of changes to the structure of revenues and expenditures with as less disturbance as possible.
Special attention will be paid to the costs of administration and government, to prevent the growth of public spending and encourage it at lower levels of government.
Smaller government – more money: The first measure of rationality that will remove many mistakes in public administration is to reduce the number of ministries. The abolition of the Ministry for the National Investment Plan, the merger of the Ministry of Culture, Ministry of Religious Affairs, Ministry of Diaspora and the Ministry of Minority Rights into one, then merging the Ministry of Trade with the Ministry of Economy and Regional Development, and Ministry of Education with the Ministry of Science we will get six ministries less, and a large reduction in the number of advisers and secretaries of state, accompanied by a further reducing of administration
II Incentive Tax Policy
Taxes encourage investments: In times of economic crisis, almost all countries have changed their tax policy in favor of greater relief of the economy and citizens. The tax policy for which we stand is aimed at encouraging investment in the economy, job creation and development of creativity and innovation of entrepreneurs. The tax system must be based on expanding the number of taxpayers and reducing tax rates, or the granting of tax incentives to those who are directly engrossed by the economic crisis and struggling with its consequences, by maintaining employment, export and other business operations. The development of the tax policy must also take into account the objectives of a balanced regional development, which insists on an innovative concept for offering incentives to investors who are willing to invest in the least developed regions of Serbia.
We’ll reform the tax system to citizen’s income by introducing a synthetic instead of the current very unfair schedular system, and exemption from payments of taxes on capital income cannot be a priority over reducing taxation of labor income, which will be a direct contribution of fiscal policy to employment.
Cross Taxation: Without delay we shall apply cross-taxation, which will tax all those who have property not covered by their actual revenue.
Comprehensive fiscalization will continue so the flows of money in circulation are fully registered, which is a key measure to fight the gray economy and corruption. It will reduce the number of different abstractions and social contribution rates on workers’ wages, as a stimulus to employment and reduction of untaxable labor in the economy.
We will reduce income tax to 8 percent. This would not to significantly reduce budget revenues, but many companies that have high rates of profit in some surrounding countries would be motivated to change their headquarters.
III Balanced Monetary Policy
Stable exchange rate: We’ll run a restrictive and real monetary policy and real, which will ensure the stability of the Dinar exchange rate, but not at the expense of export competitiveness of our enterprises and the reduction of investment activity since these are two key objectives of economic policy during the economic crisis and the preconditions to overcome it.
The inflation target will be reduced gradually in order to control pressure on the nominal exchange rate, and thereby reduce the risks of economic competitiveness.
The interest rates of central bank, the rate of the required bank reserves and interventions in the foreign exchange market should serve the security and stability of the exchange rate and motivation for investment and exports.
We will make the work of the treasury more transparent, especially when it comes to issuing treasury bonds and bills in order to secure short-term liquidity of the budget.
IV Limited Government Borrowing
A loan is not expensive when used in manufacturing: The borrowing policy will include clear restrictions concerning the total borrowings of the state and economy to ensure long term financial stability.
Improving conditions for investment by domestic and foreign investors and employment will contribute to achieve economic growth without excessive government borrowing. Borrowing from commercial banks should be reduced to a minimum to reduce the cost of financing the deficit and short return deadlines. Loans from international financial institutions and loans from countries that are strategic partners of Serbia and in other fields of action will ensure the effectiveness and cost of borrowing, but also reducing the risk of economic dependence.
When making decisions on new borrowing should be guided by the principle that no credit is expensive if invested into domestic production and employment, and that none is advantageous if intended for government spending
In mid 2006, during the term of the government in which DSS has had a leading role and prime minister, it was decided that Serbia would within one year return the outstanding debt to the IMF, which was just over a billion dollars. This decision was implemented, and Serbia had at the time from a middle indebted country became a state with a relatively low external debt.
We’ll adopt a national strategy for public debt management. This means that decisions were clearly made on the limits of borrowing, the clear objectives of borrowing, the strategy of returning the received debt, and transparency of the decisions listed.
V Financial Markets
Indices BELEXfm and BELEXline and BELEX SRX recorded in the last two years a great drop. Only a portion of financial instruments is currently being traded on the financial market, mostly shares and bonds. In the future it is necessary to secure the market – to introduce other securities traded on stock exchanges in the region.
One of the major securities should become a warehouse receipt, which is in line with the practice of developed countries, making it necessary to make appropriate amendments to the Law on Securities.
Through the transfer of property rights to municipalities to create conditions for the introduction of municipal bonds, which would in general provide a faster overall development of financial markets, and a decentralized creating of funds sources for municipal infrastructure projects.
