THE GOVERNMENT will stick to its ambition to squeeze the public finance deficit under 3 percent of the GDP; at least this is what the draft state budget for 2013 tabled by the Finance Ministry under the leadership of Smer’s Peter Kažimír suggests. The budget, which will be the most generous to the department of education next year, targets a deficit at €3.317 billion with revenues at €13.6 billion and spending at €16.917 billion, the draft budget suggests.
“The primary goal of the government in the sphere of consolidation of public finances is squeezing the deficit of public finances to 2.9 percent of the GDP in 2013 in a way that Slovakia keeps its obligations towards the European Union flowing from the Pact of Growth and Stability,” the Finance Ministry said in its release from August 15.
The deficit should further shrink to 2.4 percent in 2014 and 1.9 percent in 2015, according to the ministry. Yet, in order to achieve these numbers, the state needs to keep the deficit at 4.6 percent of the GDP this year. Nevertheless, based on available data on budgetary developments without additional measures the deficit could be expected to stretch to 5.3 percent of the GDP in 2012, the ministry said.
“Additional measures of €629.3 million in 2013, €647.2 in 2014, and €665.1 million in 2015 needs to be adopted,” said the ministry.
Of the measures adopted so far, changes to the second private pension pillar, specifically the cut of the percentage amount that employees can contribute to their personal accounts from 9 to 4 percent of the gross income, will help the budgetary ambitions the most by bringing €700 million, according to the Sme daily.
The draft already includes some measures, which have already been adopted or are in the pipeline, such as the revision to the social insurance act; special levies set to be deduced by banks and regulated companies excise tax from tobacco products, the ministry said.
On the other hand, no priority expenses of individual ministries have been included – notably, the planned consolidation of the health insurance market as planned for 2014, the TASR newswire wrote.
The Finance Ministry is set to submit another set of consolidation measures in the upcoming few weeks designed to bring an extra €630 million to the state coffers, the ministry’s State Secretary Peter Pellegrini said on August 15, as quoted by TASR.
“We have exactly two months now to submit the budget approved by the cabinet to the parliament by October 15 whereby the deficit [in 2013] will be 2.9 percent of GDP,” said Pellegrini adding that the measures are not to affect the most vulnerable groups of people while its effect on economic growth should be as minimal as possible.
The measures themselves, which are to be submitted for inter-ministerial comments soon, should include a rise in the income tax rate for individuals with monthly salaries topping €3,246 and an increase in corporate income tax from 19 to 23 percent. Changes in the tax-deductible lump-sum expenses for the self-employed are also in the works. Apart from these tax-related – or revenue-generating – initiatives, the state will also adopt measures in other areas, said Pellegrini, as quoted by TASR.
As of some of the available details, the budget of the Defence Ministry could drop to an all-time low: 1 percent of GDP or €736 million, based on the draft. Nevertheless, the Ministry of Education should receive for the next three years the highest package of money of all the departments with a coffer worth €2.45 billion for next year, SITA reported.