Page 70 - Central & Southeast Outlook 2020

successful completion of the tender for concession of Montenegro’s two international airports.
On the other hand, the government plans to spend more on wages of workers in the health and education sectors, construction of the Bar-Boljare motorway and financial consolidation of the flag carrier Montenegro Airlines.
The government plans to invest €145.7mn in the Bar-Boljare motorway, while €100mn will go to the tourism sector. Another €169.7mn will be spent on road construction and upgrades.
3.9 ​Budget - Romania
Beside the local and general elections, f​iscal policy remains a hot topic and a source of risks through 2020 ​after the expected 4.4%-of-GDP budget deficit in 2019.
The government sketched a budget for 2020 that is subject to multiple risks. It envisages a 3.5%-of-GDP deficit but the shaping of the fiscal policy is only at the beginning. The main causes of the fiscal deficit are the pension hikes (15% in September 2019, followed by 40% planned in September 2020) on top of the public payroll hikes over the last few years. The new government promised to observe the 40% hike in September 2020, while the corrective measures are still unconvincing, though they are likely to be enhanced.
Rating agency S&P said when revising downward Romania’s outlook to negative that it believes “there are grounds to question the realism of the revised budgetary targets over the 2020-2022 period.” And indeed, S&P projects a 4% of GDP deficit target for 2020, versus the official target of 3.5%. On the upside, public debt is not expected to exceed 40% of GDP over the forecast period, according to the rating agency’s forecast.
While maintaining its rating and stable outlook on Romania’s sovereign in early November, fellow rating agency Fitch said it expects public debt levels to rise to 38% of GDP in 2021 (from 35% in 2018), still below the current BBB median of 40%.
3.10 ​Budget - Serbia
Serbia adopted a budget for 2020 setting a slim deficit of RSD20.2bn (€170mn), equal to 0.3% of the expected GDP.​The revenue in 2020 is projected at RSD1,314.5bn, while spending was set at RSD1,334.7bn. RSD295.4bn has been earmarked for wages and RSD581.2bn for pensions, while a record-high RSD260bn will be
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