Balanced budget postponed to 2021

Parliament passed state budget for 2020 after a very short discussion.

PM Peter Pellegrini and Finance Minister Laislav Kamenický shake hands after parliament passed the state budget for 2020.  PM Peter Pellegrini and Finance Minister Laislav Kamenický shake hands after parliament passed the state budget for 2020. (Source: TASR)

While Slovakia's goal was to have a balanced budget this year, it will not achieve it earlier than in 2021. On Tuesday, December 3, parliament passed the country’s state budget for next year and the public general government for 2020 to 2022 after the historically shortest discussion on a budget. The discussion lasted less than seven hours.

“The winners are primarily the people,” said Finance Minister Ladislav Kamenický after the vote, adding that despite the deteriorating macroeconomic assumptions with the economic growth estimated at only 2.3 percent next year, they managed to incorporate into the budget many social measures in favour of the people.

The deficit is expected to reach 0.68 percent of gross domestic product (GDP) in 2019. The deficit should fall to 0.49 percent of GDP next year, and a balanced budget should be achieved as of 2021. Meanwhile, the budget anticipates a fall in the total state debt next year to just below 50 percent of GDP (49.9 percent).

The opposition criticises the budget, arguing that it is unrealistic, as some revenues are overestimated and, on the contrary, spending is artificially reduced.

Related articleSlovakia may not comply with EU’s Stability and Growth Pact Read more 

“Not only does the Council for Budget Responsibility not believe the official numbers, but also the National Bank of Slovakia and the European Commission,” said Tomáš Meravý of the Za Ľudí party of Andrej Kiska, as cited by the SITA newswire. “The reason why the government resorts to such practices is obvious: the fiscal rules do not allow it to submit a budget with a deficit higher than 0.5 percent, even though the real development is miles away from this goal. Revenues are obviously overrated and expenditures are underrated.”

Related articleThe European Commission is sceptical of Slovakia's budget Read more 

MPs approved changes worth hundreds of millions of euros in response to the measures that lawmakers adopted after the draft budget bill was submitted to parliament in order to ensure that the deficit target of half a percent of GDP was met. These changes included scrapping the increase of the excise duty on tobacco products, reducing planning revenues by €101.8 million, as well as the reduction of tax revenues by the amendment to the Income Tax Act in the amount of €32.3 million euros, aimed at supporting the development of company rental housing, and doubling of the bank levy, increasing revenues by €114.1 million.

Related articleNo balanced budget this year Read more 

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