The National Assembly adopted amendments to the Law on Budget System

On 07 October 2019, the National Assembly of the Republic of the Serbia adopted the Law on Budget System (the “Law”), published in the Official Gazette No. 72/2019 dated 07 October, 2019, effective the day after publishing in the Official Gazette on 08 October 2019.

The Law supplemented the definition of a record account, as it was omitted from the existing definition when it comes to its implementation within the system of execution of the budget of the local government. In addition, the Law also stipulates that the Fiscal Strategy, after its adoption by the Government, shall be submitted to the National Assembly for consideration, to the Committee on Finance, the Republican Budget and the Control of Spending of Public Funds (the “Committee”). The Committee is then tasked with assessing whether the Fiscal Strategy has been drafted in accordance with the fiscal principles and rules provided for by the Law, on the basis of which the Committee also makes a recommendation regarding the Fiscal Strategy. If, however, the Minister proposes that the Government make the changes proposed by the Committee, a revised Fiscal Strategy is drawn up, which is then submitted to the Committee again. As the legislator says in the Draft Law during 2019, due to responsible fiscal policy management, fiscal developments were better than planned and this Law enabled the increase of public sector wages as early as next year. Thus, the Law provides for different percentages of increase, among others, for the following budget users, the Ministry of the Interior, the Constitutional Court, health care institutions, higher education institutions, primary and secondary education institutions. In addition, the Law extends the ban on employment with public funds users until the end of 2020. The law also extended the deadline for implementation of the provisions related to the program budget by health and pharmacy institutions, this deadline was extended from 2020 to 2021. In addition, the deadline specified for applying international accounting standards for the public sector has been extended from 2020 to 2023. The deadline was extended because at the time of the Law’s adoption some of the requirements for the implementation of the standards haven’t been met. The deadline for introducing gender responsive budgeting has also been extended from 2020 to 2021. What has also been changed by the Law is that from the budget for 2021, will be applicable the rule that tax expenditures are reported in the general section of the budget law.

In the proposal of the Law the legislator emphasized that fiscal consolidation was successfully implemented. It was also pointed out that because of the responsible conduct of fiscal policy the Law enabled another increase of public sector wages in 2019.

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