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Revenue increase speeds budget passage

A listless four-day discussion on the 2002 state budget draft ended December 13 with an 81 to 46 vote in favour of the proposal in the 150 seat legislature.
The state budget forecasts a deficit of Sk38 billion on income of Sk219.8 billion and expenditures of Sk257.8 billion. The final shortfall in public finances, at Sk36.8 billion, is equal to 3.5% of expected Slovak GDP, thus meeting a deficit promise Slovakia had made to the International Monetary Fund. Last year the deficit was planned at 3.9% of GDP.
With a key measure to eliminate off-budget funds having passed the week before, apathy reigned and a session December 7 had to be adjourned after only a dozen MPs showed up.

A listless four-day discussion on the 2002 state budget draft ended December 13 with an 81 to 46 vote in favour of the proposal in the 150 seat legislature.

The state budget forecasts a deficit of Sk38 billion on income of Sk219.8 billion and expenditures of Sk257.8 billion. The final shortfall in public finances, at Sk36.8 billion, is equal to 3.5% of expected Slovak GDP, thus meeting a deficit promise Slovakia had made to the International Monetary Fund. Last year the deficit was planned at 3.9% of GDP.

With a key measure to eliminate off-budget funds having passed the week before, apathy reigned and a session December 7 had to be adjourned after only a dozen MPs showed up.

Later discussions were muted, as Finance Minister Brigita Schmognerová allowed MPs almost a billion crowns extra to put towards public projects of their choice. The increased revenues were gained from a new consumer tax on tobacco and cigarettes.

The MPs chose to increase funding for schools over the cabinet proposal by Sk416 million, education development by Sk228 million and health care by Sk384 million.

While Prime Minister Mikuláš Dzurinda called the 2002 budget a sign of responsibility from government parties, economists said the document bore signs that the ruling coalition was unwilling to take significant reforms or spending cuts before September 2002 elections.

Some analysts questioned how international institutions would respond to the budget, as some of the planned revenues were to come from privatisation and license sales, while some one-off costs such as Sk15.5 billion in bank restructuring were not included in expenditures.

"The good news is the cancellation of the off-budget funds, which in the past were not included in the state budget and therefore represented a less efficient use of money," said Slovenská sporiteľňa bank analyst Tomáš Kmeť. "The new fiscal year 2002 will be at least more transparent."

Opposition MPs rejected observations they had been more passive this year than before past budgets, saying they didn't believe the government could meet its targets, but that they had been powerless given the apparent unity of government parties on the draft.

The Slovak GDP in 2002 is expected to be Sk1.05 trillion, growing at 3.6% over this year. Average inflation is pinned at 6.7% and unemployment at 18.9%.

Despite criticism of the budget by one opposition MP as "perverse", Minister Schmognerová said the government could still "look in the mirror with equanimity", adding that a balanced budget had been "a fine ambition that proved impossible to achieve".

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