June 20 (SeeNews) - Serbia needs to cut its fiscal gap to 0.5% of GDP by 2019 in order to reduce its huge public debt, which is estimated to reach 26 billion euro ($29.4 billion), or 78% of GDP by end-2016, the country's fiscal council - an independent state body, accountable to parliament - said on Monday.
For the permanent recovery of public finances, the government's debt should drop to below 60% of GDP, the council advised, suggesting that a reduction of the fiscal deficit to 0.5% of GDP by 2019 would lead to a narrowing of the public debt to 70% of GDP by 2020 and further to below 60% in 2025.
The government's current plan for narrowing the budget gap to 1.5% of GDP would not cut the public debt below the 60% ceiling until 2030, the council said.
It stressed that for the improvement in public finances, it is crucial to significantly accelerate the reforms in the bloated public sector and the completion of the privatisation of loss-making state enterprises, as well as to strengthen tax collection.
The council forecast that Serbia's economy will expand by some 2.5% this year, or even more, with growth accelerating further to around 3% next year, and exceeding 4% in 2018.
($=0.8834 euro)