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Kažimír announces lower-than-expected state income and additional cuts

The total income flowing into the state budget this year will be €347 million less than what was forecast back in February, according to the latest prognosis by the Finance Ministry. Next year, the budget will come up short €611 million when compared to previous forecasts.

The total income flowing into the state budget this year will be €347 million less than what was forecast back in February, according to the latest prognosis by the Finance Ministry. Next year, the budget will come up short €611 million when compared to previous forecasts.

"Given the worsening in macroeconomic developments I have to announce a drop in overall incomes for the state budget of 0.5 percent of GDP this year and of 0.8 percent of GDP next year," said Finance Minister Peter Kažimír on Thursday, June 27, as quoted by the TASR newswire. Macroeconomic developments in Slovakia - a fall in GDP growth - are responsible for two-thirds of the shortage. "These figures confirm one thing - that 2013 is the second worst year in our modern history, it's the second worst year after 2009," he added.

Squeezing the public finance deficit under 3 percent of GDP this year is still feasible, but further consolidation measures will be necessary, asserted Kažimír, who is working on a review of state expenditures, when it comes to ordinary goods and services, salaries, capital expenditures and EU funding. "Every ministry will have to chip in," he added. He also said that unless all local councils begin to save expenditures in line with their commitments stipulated in a memorandum with the government, the Finance Ministry will cut the share of funding that they receive.

The first six months of the year have shown that city, town and village mayors, taken as a whole, have not made good on their commitment to curb expenditures. The deviation from the objective reaches close to €150 million, he added. While most municipalities do deliver on the agreements, some 300 are failing to adhere to the plan. As a result, they need to amend their spending by September 2013 or the ministry will push for changes to the way they are funded by altering their share of revenues from taxes collected by the state. Prime Minister Robert Fico and representatives of the Slovak Towns and Villages Association (ZMOS) signed a memorandum in October 2012 in which local authorities pledged to run their offices in a responsible manner and create financial reserves.

(Source: TASR)
Compiled by Zuzana Vilikovská from press reports
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