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SEVERAL PARTIES EASE THEIR DEMANDS

Budget compromises strike a balance

THE TUG-OF-WAR between ruling coalition parties over the allocation of funds for next year's state budget is still on, but unexpected compromises from some of the ministries has brought an end in sight.
The Christian Democratic Movement (KDH), the New Citizen's Alliance (ANO), and the Hungarian Coalition Party (SMK) showed flexibility by easing their original demands, which would have inflated the budget by Sk10 billion (€240 million).
The KDH slashed its request in half, holding out only for the department of education, which has been notoriously underfed.

THE TUG-OF-WAR between ruling coalition parties over the allocation of funds for next year's state budget is still on, but unexpected compromises from some of the ministries has brought an end in sight.

The Christian Democratic Movement (KDH), the New Citizen's Alliance (ANO), and the Hungarian Coalition Party (SMK) showed flexibility by easing their original demands, which would have inflated the budget by Sk10 billion (€240 million).

The KDH slashed its request in half, holding out only for the department of education, which has been notoriously underfed.

Pavol Hrušovský, the head of the KDH, said it would drop its bid for Sk4.9 billion (€124 million) but insist on securing Sk2.9 billion (€70 million) for KDH-led departments.

Although easing its demands, ANO still remains concerned over the mounting debts of the health department. The debts climbed to Sk2 billion (€50 million), which should be returned to the state's coffers next year.

The SMK managed to find Sk200 million (€5 million) for its departments of agriculture, regional development, and environment, but it has pointed out ways to cut spending that could potentially frustrate the plans of its coalition partner, the Democratic and Christian Union (SDKÚ).

The SMK surprised the SDKÚ when party boss Béla Bugár suggested that cuts to SDKÚ-managed departments would save the state millions.

"We have found Sk700 million (€17 million) in reserve in the SDKÚ departments of defence, finance, foreign affairs, labour and transportation. The reconstruction of our tax offices, for example, is just one of many planned investments, but these projects can be delayed," said Bugár.

But Finance Minister Ivan Mikloš has a plan on how to find money to meet the budget demands of his ruling colleagues.

He proposes to obtain Sk500 million (€12.4 million) by paying off the state's debt early, using the money deposited in the central bank intended to cover the costs of pension reform.

He also proposes to find a further Sk250 million (€6.2 million) by cutting state-subsidised housing construction funds.

One provider of subsidised housing construction savings plans, ČSOB stavebná sporiteľňa housing construction saving bank, told The Slovak Spectator that this was bad news.

"We understand the importance of funding healthcare and education departments. But we need to stress that state support for housing construction savings plans is extremely important for a huge group of citizens. This type of government subsidy should not be moved to the margins of cabinet interest," Marta Krejcarová, spokeswoman for the ČSOB stavebná sporiteľňa, told The Slovak Spectator.

According to Krejcarová, an amendment to the law on subsidised construction savings plans, expected to be adopted this year, should stabilize the conditions for providing construction savings plans. However, if Mikloš' cuts find support, the law is unlikely to achieve the desired effect.

Other companies that provide construction savings plans were more careful with their comments.

Daniela Vlčková of the Wüstenrot stavebná sporiteľňa construction savings house told The Spectator that it would be premature to comment on Mikloš' intentions. The bank would take a stand only after concrete numbers were announced.

According to the finance minister's overall budget proposal, state incomes in 2005 would reach Sk289.9 billion (€7.2 billion) while expenses would account for Sk353.9 billion (€8.8 billion). That puts next year's state budget deficit at Sk64 billion €1.6 billion).

The Finance Ministry has estimated that the public finance deficit should be at 3.8 percent of the gross domestic product (GDP).

Peter Papanek, an advisor to the finance minister, told The Slovak Spectator that the state wants solutions that keep the deficit below agreed-upon limits.

Meanwhile, President Ivan Gašparovič signed a law on budgetary rules, which puts an end to the debate about what should happen if the ruling coalition fails to pass a budget through the parliament before the start of the new fiscal year.

The law, which will take effect at the beginning of 2005, says that if parliament fails to approve a draft bill on the state budget by December 31 of the current budgetary year, the cabinet would adopt a provisional budget based on real spending habits from the previous year, not a temporary budget approved by the cabinet.

The original law gave powers to the cabinet to define the budget if parliament failed to get one through in time for 2005.

Branislav Jáger, a KDH spokesman, told The Slovak Spectator that the KDH did not think a cabinet's decisions should take precedence over law, even if only for a limited time.

In the end, the Finance Ministry decided to stick with the law on budgetary rules, which has been in place since 1995.

"We consider it practical for the cabinet to decide on a budget for next year [in case parliament fails to adopt one]. With reforms changing the political situation, the cabinet can make provisional budget decisions based on the actual economic scenario facing them," Papanek told The Slovak Spectator earlier this month.

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