Vuković: Fiscal picture without consistent methodology - decline in investments, inflationary erosion, and growing reliance on borrowing

The Executive Director of Fidelity Consulting, Miloš Vuković, warned about inconsistencies in the presentation of fiscal data by the Ministry of Finance, highlighting a decline in capital investments and risks to the stability of public finances.

Vuković pointed to what he described as serious inconsistencies in the interpretation and presentation of fiscal data by the State Secretary at the Ministry of Finance, Tarik Turković.

- The analysis of the relationship between the capital budget and gross domestic product (GDP) indicates a significant decline compared to previous years. According to available data, the share of the capital budget in GDP is approximately 60 percent lower compared to 2020, while including data for 2019 would further emphasize the depth of this trend - Vuković stated in a press release.

At the same time, he notes, there is a lack of adequate consideration of inflationary trends.

- In conditions of elevated inflation, nominal amounts of the capital budget do not reflect the real value of public investments. When the data is adjusted for inflation, the decline in capital spending is even more pronounced, further worsening the picture of the state’s investment activity - Vuković explained.

According to him, the fiscal position in the first quarter of 2026 is particularly concerning, as current expenditures exceeded current revenues.

- Such a structure implies that part of regular budget obligations, including salaries and pensions, is being financed through borrowing, which is an indicator of a disrupted fiscal balance and increases risks to the medium-term sustainability of public finances - Vuković believes.

Additionally, he notes a methodological inconsistency in the selection of time horizons: the movement of the capital budget is observed over a six-year period, while public debt trends are analyzed over a five-year period.

- Such a selective approach complicates comparability and can lead to a distorted interpretation of trends - he emphasized.

Vuković stresses that selective presentation of data, without a clear methodological framework and without distinguishing between nominal and real indicators, can lead the public to draw incorrect conclusions about the actual state of public finances.

- We call on the Ministry of Finance to ensure transparent, consistent, and methodologically grounded reporting, in line with best international practices, in order to preserve public trust and enable informed economic conclusions - Vuković concluded.