20 June 2013

Government of Slovenia approves revised budget for 2013

The main reason for drafting a revised budget for 2013 is the worsening macro-economic forecasts in comparison with the forecasts relevant when the 2013 budget was originally drawn up, when the revenue forecast was assessed too optimistically in view of the current situation.

In the budget adopted for 2013, total revenue was estimated at €8,611.1 million, while updated estimates for 2013, which are based on actual revenue in the first five months of 2013, the Summer Forecast of Economic Trends by the end of 2013 published by IMAD, and envisaged amendments to tax legislation show that total budget revenue will shrink by 6.3 per cent in comparison to the previously adopted budget.

A high risk remains that this and next years’ economic activity will be lower than expected. The risk of a much greater reduction in economic activity than previously expected this year is linked to the international situation, both in terms of the situation in Slovenia’s biggest trading partners and the situation in financial markets. The stabilisation of the declining trend depends mainly on the success of the measures to overhaul the banking sector and other planned measures which would ease the credit crunch and help relieve the economy and revive investment.

Budget deficit

The draft revised budget for 2013 continues to pursue fiscal stability, particularly in terms revenue, while expenditure is targeted mainly in terms of re-structuring. In the previously adopted budget for 2013, planned expenditure totalled €9,620.6 million, while the budget deficit was expected to reach €1,009.4 million, or 2.8 per cent of the forecast GDP. The revised budget envisages expenditure of €9,631,1 million, which is €10,5 million more than in previously adopted budget for 2013, which means that the budget deficit will total €1,547.4 million, or 4.4 per cent of GDP.

Budget revenue

The revised budget of the Republic of Slovenia for 2013 envisages total revenue of €8,068.7 million (€542 million less than the previously adopted).

Several measures are planned to achieve greater fiscal balance, particularly a change in VAT as of July 2013 and increases in court fees. Planned revenue from the EU budget has also been modified, as the current absorption rate was low due to fewer projects being realised. The revised budget also include additional income from road tax, activities aimed at increasing the efficiency of tax collection and the tax on lottery tickets, although all these will have a significant effect only next year.

Budget expenditure

Regarding expenditure, the revised budget takes into account changes in the economic nature of expenditure and the structure of financing resources. Measures targeting expenditure continue to rationalise expenditure on public sector pay (on which an agreement has already been reached with the unions), the selection and limitation of social transfers, lowering the funds for goods and services and the selection of investment projects (primarily financed from the assigned budget and within EU programmes).

The revised budget ensures funds to cover unexpected or additional commitments due to partially implemented measures restricting some categories of expenditure or the reallocation of funds. On this basis, expenditure are higher by €10,5 million to €9,631,6 million.

Assigned and EU funds, together with the relevant Slovenian participation, are lower by approximately €168 million.

In comparison with the previously adopted budget, the revised budget increases integrated funds by over 2 per cent, while expenditure financed from assigned funds is 17.6 per cent higher, and EU funds and Slovenian participation are 15 per cent lower. The latter takes into account the fact that the implementation of cohesion policy has been delayed for various reasons (bankruptcy of contractors in construction due to the economic crisis, difficulties in acquiring land, long auditing procedures connected to public procurement, etc.), which means that the signing of contracts with contractors was delayed and works began late.

Full press release

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