Serbia’s 2023 budget reserve and energy sector loans lack transparency, says Fiscal Council

The Fiscal Council of Serbia has highlighted issues with the transparency of loans and budget reserves in its analysis of the 2023 final budget account. While the current budget reserve stayed within the legal limit of four percent of state income, the Council pointed out that the use of budget reserves and loans was not sufficiently transparent.

Key findings:

1. Current budget reserve: The analysis confirmed that the current budget reserve for 2023 was within the legal limit, amounting to 75.8 billion dinars (3.98% of total income). However, it lacked clarity regarding which decisions were included within the legal limit and which were not.
2. Non-transparent net budget loans: The Fiscal Council criticized the inadequate presentation of net budget loans, especially those used to support energy companies. It noted that these expenditures, totaling over 2.3 billion euros from 2021 to 2023, were not explicitly shown in the final budget account, nor was there clarity about which companies received the funds and under what conditions.
3. Energy sector support: The analysis also revealed that state-owned energy companies received almost 50 billion dinars in 2023, primarily through interest-free loans. Despite this significant amount, it was not reflected in the final account. The loans were mainly provided to Srbijagas, Elektrodistribucija Srbije, and Elektromreža Srbije.
4. Need for detailed reporting: The Fiscal Council stressed the need for more detailed reporting on various budget categories, particularly expenditures such as subsidies to foreign investors, fines and non-tax revenue from corporate profits.
5. Large energy sector loans: The report noted that from 2021 to 2023, over 2.3 billion euros were allocated to energy companies, with the majority directed to Srbijagas, EPS and other companies. The total amount of budget loans was higher than initially planned, and the Council suggested that these loans were likely to be written off, meaning they would not be returned to the state budget.

In conclusion, the Fiscal Council called for better transparency in reporting these financial transactions to ensure greater clarity in Serbia’s final budget accounts.