Serbia might need to revise its 2014 budget bill in the second half of the year due to lower than planned revenue, news agency Tanjug reported, quoting an analysis of Reiffeisen Bank . The government's austerity measures, which came into force as of January 1, 2014 , will likely start bearing results in H2. The measures include lowering above the average public sector wages, cutting goods and services and subsidies spending and raising the lower VAT rate from 8% to 10%. According to the Reiffeisen analysts, the slower economic growth and the high share of grey economy will result in revenue shortfalls this year, while some deferred obligations from 2013 will have to be settled in 2014. The analysis noted that revenue in 2013 was also lower than planned despite the VAT rate hike from 18% to 20% as of October 2012 , mainly reflecting the uneven economic recovery. However, the finance ministry managed to offset last year's revenue shortfall by cutting discretionary spending. Reiffeisen expects the 2013 budget gap to equal to around 4.6% of GDP, up from the originally planned 3.6% of GDP. Final budget execution data for last year will be released by the finance ministry at the end of March. The government expects the 2014 budget gap to reach 7.1% of GDP - one of the highest in the CEE region. Serb finance minister Lazar Krstic recently said that he expects the 2014 budget deficit to be smaller than the government's target due to lower-than-expected expenditures related to troubled state-controlled banks.
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