“The budget is not an invitation to the troika”

“The budget is not an invitation to the troika”

 

Review by Christos T. Panagopoulos –

Prime Minister, Alenka Bratušek, presented the 2014 and 2015 budget proposal to MPs on Tuesday as “demanding, thrifty, risky in some segments but in no way dangerous”.

The document is not an invitation to the troika but “tries to do all for us to resolve our domestic problems at home”.

Bratušek took the opportunity to criticise opposition parties, which were in charge of the 2004-2008 government under which the country’s gross debt doubled. “We are paying for your debts,” she said.

Starting the parliamentary path of the budget bill, expected to be passed in late November, Bratušek said that limitations to borrowing left the government with no other option but to smartly balance increased revenue and spending cuts.

The main features are a lowering of the budget deficit below 3% of GDP, which meets the basic demand for credibility in the EU, and an effort not to sacrifice development for debt by earmarking as much as possible for education and research and by not slowing down investment.

Commenting on tax revenue, she said the government was guided by the criteria of social fairness, which is why the VAT rate was increased and why a property tax was being introduced.

Bratušek took the opportunity to criticise opposition parties, which were in charge of the 2004-2008 government under which the country’s gross debt doubled. “We are paying for your debts,” she said.

Finance Minister, Uros Čufer, described the budget as leading towards fiscal stabilisation and announced the wish to secure a stable tax environment so that companies can plan for investments. “We will introduce no additional taxes in 2014,” he announced.

In the revised budget for 2014 and a draft 2015 budget the government plans deficits of 2.9% and 2.4% of GDP, respectively.

Revenue in 2014 is projected at EUR 8.6bn, which is EUR 200m more than planned in the original document, while the planned expenditure for the next year stands at EUR 9.6bn.

The deficit is being increased by slightly over EUR 100m compared to the original budget.

On the revenue side, Čufer pointed to an additional EUR 143m next year resulting from the VAT increase and EUR 160m resulting from the halted gradual lowering of the corporate tax rate.

In expenditure, he highlighted cuts in the public sector, frozen pensions and social transfers and a much more rational management of necessary expenditure.

Debates on the budget will now start at parliamentary committees, while the parliamentary procedure will be coupled with increased EU oversight under new regulations that took effect in May requiring eurozone countries to coordinate fiscal policy with the EU.

Slovenia submitted the draft 2014 budget to the European Commission on 1 October and first feedback can be expected as early as 15 October in the event the Commission finds shortcomings in the meeting of deficit and debt targets.

The final opinion will come by 15 November, whereupon the budgets of all eurozone members will be scrutinised by the Eurogroup on 9 and 10 December.

Source: Slovenia Times