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Council concerned about draft administration budget

THE DRAFT budget for public administration for the next three years contains several serious risks, the Council for Budgetary Responsibility (RRZ) has stated in its evaluation.

Finance Minister Peter Kažimír(Source: TASR )

The RRZ specifically points to the fact that despite an ambitious plan to cut the deficit in the upcoming years, additional measures except for the areas of sanctions set in the constitutional law on budgetary responsibility have not been introduced in the budget so far.

The council stressed, as quoted by the SITA newswire, that it is crucial to create room to manoeuvre in fiscal policy in good times, when the economy produces higher tax incomes and lower expenses. However the government has not used several positive influences to speed up consolidation, and has rather increased the final target values of budgetary deficits when updating the three-year budget. The RRZ sees introduction of limits of expenses, more detailed elaboration of consolidation measures, and better effectiveness of their use as potential steps helping the budgetary responsibility.  

The RRZ sees risks prevailing in the draft budget, citing over-estimated non-tax revenues, especially higher dividends or incomes from emission quotas sold. The low level of expenditure on health care and local self-administration without explaining the austerity measures is also perceived as risky. The draft also ignores corrections of drawing of EU-funds.

The council recommends the risks to be more balanced, from the point of view of the consolidation strategy. The RRZ concludes that the deficit of public administration could amount to 2.7 percent of GDP without the impact of corrections in 2016, and the gross debt thus would grow to 52.9 percent by the end of 2016. In this case, new measures would have to be taken to achieve the planned targets.

However, the Finance Ministry insists that the draft budget is realistic and defined targets are met. The continued consolidation and good economic growth will lead to a decline in the deficit of public finances to 1.93 percent of GDP and the debt will gradually fall to below 49 percent of economic performance by 2018. The ministry perceives the RRZ evaluation as a hypothetical scenario which expects all risks to come true. It stresses the potential positive impacts, good structure of Slovak economy and a swift pace of growth. The ministry sees the targets as ambitious but achievable.

The draft budget will be again on the parliamentary agenda on November 18, according to SITA.

Topic: Economics


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