After 10 days of tough negotiations, the government finally won over MPs December 13 and pushed its 2001 budget proposal through parliament, sticking to its original 37 billion crown ($740 million) deficit - 3.94% of GDP.
Ninety of the 139 MPs present supported the cabinet proposal, under which state revenues will reach 180.6 billion crowns while expenditures will run to 217.8 billion. Government officials said the number of votes cast in favour - many more than needed - showed that the ruling coalition remained united and fiscally responsible.
Finance Minister Brigita Schmögnerová and Deputy Prime Minister for Economy Ivan Mikloš had been left with the task of placating MPs, who had demanded spending increases that threatened to push up the deficit by as much as seven billion crowns.
Speaking just after the budget was passed, Finance Ministry spokesman Peter Švec told The Slovak Spectator: "We are very pleased because it was a long and difficult process [to get MPs to support the proposed budget], but what is especially good is that the deficit stayed at the same level as originally proposed by the cabinet, and that all coalition parties supported the budget."
Both Schmögnerová and Mikloš expressed pleasure with the outcome, Mikloš saying that "I'm very glad that realism carried the day. It's a very good signal both economically and politically."
Analysts cautiously welcomed the passing of the budget, but pointed to some concerns. Ľudovít Ódor, analyst with Československá obchodná banka (ČSOB) said that there were some potential risks in trying to meet the deficit target.
"I think that the five billion special contribution that [state gas utility] SPP has to make next year might not be realistic with SPP's resources [the company recorded a fall in gross profits of 40% for the first half of this year compared to 1H99 - ed.note]," he said.
He added: "Another problem is that revenues from privatisation, part of the so-called 'memorandum chapter' of the budget, will be used to cover government guarantees for loans, if necessary. If this happens, it will increase the budget deficit."
However, according to the ČSOB analyst, the government may have actually underestimated revenues mainly due to low calculations for incomes from value-added tax (VAT) and consumption tax. "The government is expecting to collect 65 billion crowns from VAT next year. This year, it already has about 70 billion crowns from VAT, and I think that it will certainly get more than the 65 billion crowns estimated next year."
18. Dec 2000 at 0:00 | Ed Holt