Finance Minister Peter Kažimír (source: TASR)
The ruling coalition would like to open the Budgetary Responsibility Act that was passed by a constitutional majority in 2011. "The current wording of the debt brake law leads to quite big problems and risky decision-making in the field of debt financing," Kažimír said on RTVS‘ discussion programme Sobotné Dialógy / Saturday Dialogues from May 7.
He was referring to the so-called front-end loading or creating of a financial reserve. "In order to be able to repay its debts at the beginning of the year, the state has to borrow before the end of the year, thus deepening the debt," the minister explained. He suggests reconsidering the concept of net debt or methodological changes.
The minister also pointed to anticipated problems with funding of major transport construction projects that might occur after the European funds are exhausted after 2018 or 2019. "We will have to finance additional infrastructure projects from internal resources, from the state budget," Kažimír said, as quoted by the TASR newswire. "The debt reduction should gradually be targeted at the level of 40 percent, while today it is 50 percent. We will be unable to smoothly continue in these construction projects if we do not look at these sanction bands.”
Vice-chair of the Parliamentary Finance and Budget Committee Eugen Jurzyca (Freedom and Solidarity-SaS) confirmed that the liberals are willing to discuss opening up the law with the ruling coalition. However, they insist on the introduction of binding expenditure ceilings. “We will support the ceilings and we will try to reasonably agree on the net debt. However, we find the investment exemption too high if we consider the country's performance so far,” he said. He pointed to steps taken by the former government, led by Smer, such as investment stimuli, bailout of the construction company Váhostav or free-of-charge rail transport. According to former education minister (2010-12) Jurzyca, these were steps that should not have been taken.
Kažimír explained the worsening of last year’s fiscal deficit by 0.5 percent (compared to the plan) via the decision to refinance corrections in European funds. A seven-year programming period has just ended and the government has drawn EU funds earmarked for transport up to the last cent, said Kažimír.
The minister reiterated the intention to achieve a balanced budget in 2019.
However, Jurzyca stressed that a higher volume of income was available to the government last year thanks to higher than expected economic growth. Therefore, he criticised the lessening of sustainability of public finances, as well as the announced delay in attaining a balanced budget. On the other hand, the opposition MP welcomes the planned lowering of corporate income tax by 1 percent and scrapping of tax licences. Jurzyca also disagrees with a special levy for retail chains. The government should rather strive to improve its regulatory environment in sectors subject to regulation, he said.
Kažimír said the cabinet will come up with new legislation this summer.
