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MPs debate 2012 budget

THE RULING centre-right parties cleared another boulder from the path of their draft state budget for 2012, which calls for a deficit of 4.6 percent of GDP, when MPs from the Christian Democratic Movement (KDH), one of the four governing parties, gave up on an amendment they had proposed that could have resulted in Finance Minister Ivan Mikloš withdrawing the entire draft budget from parliament.

THE RULING centre-right parties cleared another boulder from the path of their draft state budget for 2012, which calls for a deficit of 4.6 percent of GDP, when MPs from the Christian Democratic Movement (KDH), one of the four governing parties, gave up on an amendment they had proposed that could have resulted in Finance Minister Ivan Mikloš withdrawing the entire draft budget from parliament.

While the final fate of the budget draft, which sets revenue at €15.281 billion and expenditure at €18.524 billion, is still uncertain, all the parties in parliament seem to have a strong incentive to adopt a budget for next year: European and global financial markets are in turmoil, and on November 30 six central banks decided that they needed to join forces to soothe jittery nerves. The country’s failure to pass a viable state budget for 2012 would mean the country would have a provisional budget based on 2011 revenue and expenditure and economic observers said that would send a clearly negative signal to edgy markets.

Parliament passed a number of laws on November 30 to pave the way for the actual budget legislation, including a new package of taxes on alcoholic beverages and crude oil, as well as an amendment to the Pension Savings Act and others.

The Slovak parliament also passed to a second reading in December the constitutional debt-ceiling law that should force future governments to exercise better budgetary discipline.


Parliament also passed an amendment that will freeze the salaries of MPs, cabinet members and the president in 2012.



KDH yields; Smer angered



None of the MPs from the KDH ended up voting for the draft amendment submitted by their colleague Anton Marcinčin to increase monthly health insurance premiums for those persons whose premiums are paid by the state. Marcinčin argued that the health-care sector is underfunded and his proposal would have increased the monthly payments made by the state from the 4 percent of the assessment base specified in the draft budget to 4.37 percent for those citizens who do not pay their own health insurance premiums, the SITA newswire reported.

But that idea hit a raw nerve with Mikloš, who has gone to considerable lengths to torpedo any legislative initiatives that would increase next year’s budget deficit above 4.6 percent of GDP. The finance minister threatened that if the health insurance amendment was passed, he would withdraw the entire budget draft from parliament.

“I will not allow the ruining of the public finances in such tough times, and for Slovakia’s credibility to be endangered,” Mikloš stated, as quoted by SITA.

Marcinčin ultimately voted against his own amendment because no reasonable agreement was found over how to shift finances from other parts of the budget, with Marcinčin telling the Sme daily that “we yielded and pointed out shortcomings”.

But the Smer party did not reduce its criticism of KDH for abandoning the proposal, which Smer supported, calling KDH’s action “a Pharisees’ move”. The previous minister of health under the Smer-led government, Richard Raši, argued that the government and Health Minister Ivan Uhliarik had declared they would increase the state’s health insurance contribution, which would have helped to cover the cost of increasing salaries for nurses as well as wage promises made to doctors.


Raši stated that the failure to approve the amendment would result in a €100-million shortfall in the health-care system.



Towards fiscal discipline?



The MPs who return to parliament next year after the March 10 parliamentary elections will not see a salary increase, after they passed a revision to the legislation on salaries of constitutional officials via a fast-tracked procedure. Chairs and deputies of the Supreme Audit Office, the General Prosecutor’s Office, the country’s ombudsman, heads of state administrative bodies and state employees also will say goodbye to bonuses next year under the approved legislation, SITA reported.

Those who enter parliament next year will not receive new laptops and printers and expenses for the deputies’ offices and as well as for their assistants will be frozen.

But the salary freeze will not affect judges and prosecutors because the Constitutional Court recently ruled that it would be unconstitutional to reduce judges’ salaries in this way.

A proposal advanced by the leader of the Ordinary People faction, Igor Matovič, that would have frozen the salaries of constitutional officials until the state approved a balanced budget did not pass even though Matovič had made his support for the overall budget bill conditional on passage of his wage-freeze proposal.

The constitutional law providing for a debt ceiling was advanced to its second reading. The law sets an initial limit on public debt at 60 percent of GDP, with a gradual reduction of 1 percentage point per year after 2018 until it reaches 50 percent of GDP. If a future government hits the 60-percent debt ceiling, it would face an automatic no-confidence vote in parliament. The law will also trigger a series of preliminary steps when public debt approaches certain thresholds.

The debt-ceiling bill was handled using the fast-tracked legislative procedure even though some MPs from the Smer party argued that the bill, which had been submitted by deputies from six parties, should have been moved through parliament under standard procedures.

The Finance Ministry was insistent that the current financial turbulence calls for quick and effective solutions to stabilise the monetary and economic system of the eurozone, and that Slovakia’s adoption of a realistic budget for 2012 was part of that process, SITA reported. However, as The Slovak Spectator went to press on December 1, no final vote had been held by MPs on the 2012 budget.


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