LACK OF MAJORITY IN PARLIAMENT MEANS TOUGH HURDLE AHEAD

Budget poised for OK

THE SLOVAK cabinet is just one step away from formally approving the draft state budget for 2005. With cabinet ministers already giving a political nod to the draft budget, the final hurdle waits in parliament.
The cabinet's formal approval of the state budget for 2005 is expected on October 13. Their draft needs to reach the parliament by October 15, as stipulated by the law.
After lengthy talks among cabinet ministers, the ruling coalition reached a compromise on October 4. None of the ruling parties were entirely satisfied, but they were running out of time for an agreement. All parties showed flexibility by lowering their financial demands.

THE SLOVAK cabinet is just one step away from formally approving the draft state budget for 2005. With cabinet ministers already giving a political nod to the draft budget, the final hurdle waits in parliament.

The cabinet's formal approval of the state budget for 2005 is expected on October 13. Their draft needs to reach the parliament by October 15, as stipulated by the law.

After lengthy talks among cabinet ministers, the ruling coalition reached a compromise on October 4. None of the ruling parties were entirely satisfied, but they were running out of time for an agreement. All parties showed flexibility by lowering their financial demands.

In the end, the financial demands of the ruling coalition parties reached Sk4 billion (€100 million). Although this represents Sk1.3 billion more than what is available in the state coffers, the amount is significantly less than the ministers' original demands, which would have inflated the state budget by Sk10 billion (€240 million).

"The most important thing is that we have managed to keep the assumed limit of the public finance deficit," Finance Minister Ivan Mikloš told the press.

Although the state plans to spend more than Sk320 billion (€7.95 billion) in 2005, the deficit should represent 3.4 percent of the GDP next year, excluding the costs expected to be incurred as a result of the pension reform.

According to Mikloš, the cabinet has reached deep into the state's pockets and found needed funds for the Transport, Environment, Education, Health, Agriculture, and Regional Development Ministries. These departments have been elevated to priority status for the next year.

In fact, Economy Minister Pavol Rusko pleasantly surprised his coalition partners when he found an additional Sk2.5 billion (€60 million) in the form of dividends in state-run companies.

"We have revised the economic outlook [of companies in which the state has an interest] for this year, and it turns out that current dividends from those companies, plus dividends from Východoslovenská energetika last year, will be Sk2.5 billion more than we had estimated," Rusko told the financial daily Hospodárske noviny.

Additional money for meeting the coalition parties' demands were found by reducing the Defence Ministry's budget by Sk145 million (€3.6 million) and discovering Sk200 million (€4.9 million) from privatisation assets.

The New Citizen's Alliance (ANO) reduced its demands by Sk520 million (€12.9 million), the Hungarian Coalition Party (SMK) gave up Sk70 million (€2 million) and the Christian Democrats (KDH) eased their claims by Sk380 million (€9.4 million). The Slovak Democratic and Christian Union (SDKÚ) did not have extra demands, and added that SDKÚ ministers would try to save Sk430 million (€10.6 million) by efficiently managing their departments.

Based on cabinet compromises, an additional Sk1.55 billion (€400 million) will go to the health sector managed by the ANO, and an extra Sk1.285 billion (€300 million) will go to sectors controlled the KDH. Departments controlled by the SMK will get Sk330 million (€8.2 million) from the reserve.

Finally, funds flowing to the Agriculture Ministry in direct payments to farmers were increased to 53.2 percent of the EU average, and the Health Ministry will receive an increase of about 10 percent.

The toughest part of the process will be the budget vote in parliament, since the ruling coalition does not control a majority.

Mikulas Dzurinda's team will have to rely on the vote of independent deputies who have not given a clear word on whether they would support the budget yet.

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