Serbia's government recasts 2020 budget, proposes more spending

BELGRADE, Nov 5 (Reuters) - The Serbian government approved on Thursday additional spending in its 2020 budget for the second time this year to compensate for economic damage caused by the coronavirus pandemic and invest in medical facilities to combat the disease.

The draft revised budget envisions an increase in deficit to 483 billion dinars ($4.87 billion), or 8.9% of gross domestic product (GDP), on revenue of 1,291.4 billion dinars.

In a statement, the government said it plans to use funds to mitigate effects of the coronavirus pandemic, including purchases of medical equipment, construction of COVID-19 hospitals, investments in infrastructure and subsidies to businesses and agriculture.

The increase in deficit would be mainly covered by borrowing at home and abroad.

The government also said the economy of the Balkan country is set to contract 1% this year, better than the previously forecast -1.8%. The International Monetary Fund said Serbia’s economy would shrink by 1.5% in 2020 and return to growth in 2021.

“In the absence of these measures to support the economy and the population, the decline in GDP in 2020 would be ... about 5%,” the statement said.

The adoption of government’s proposal by the parliament in which the ruling coalition led by the Serbian Progressive Party commands an overwhelming majority, is seen as a formality.

In April, Serbia’s parliament also adopted a recast of the 2020 spending plan, increasing deficit to 7% from a previously planned 0.3%.

To curb a spike in coronavirus infections, the government also proposed fines of 5,000 dinars for all who do not wear face masks indoors and fail to maintain physical distance.

Graphic-Global COVID-19 tracker: here ($1 = 99.2600 Serbian dinars) ($1 = 0.8472 euro)

Reporting by Aleksandar Vasovic in Belgrade Editing by Matthew Lewis