Govt Will Follow Fiscal Rules & Forecasts in New Budgets

By , 10 Sep 2019, 11:29 AM Politics
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STA, 9 September 2019 - The coalition reaffirmed its commitment to honour the fiscal rule in drafting the budgets for the next two years as it met in Brdo pri Kranju on Monday. The ceiling for total expenditure was set in April, but the budget bills will be endorsed only after the latest economic forecasts are released, said Finance Minister Andrej Bertoncelj.

"We're waiting for the last economic forecast and then we'll be able to complete the puzzle with greater certainty," Prime Minister Marjan Šarec said after the meeting of senior coalition officials.

The government macroeconomic forecaster IMAD will release its latest forecasts for the next two years on 19 September.

This is also the date of the government session dedicated to the budget bills, which must be sent into parliamentary procedure by 1 October.

Bertoncelj warned coalition officials today that both the Slovenian and foreign economies were cooling. "Let's hope that the economic forecasts will not change much or else a new round of talks will be needed," he said.

However, he noted that Slovenia's economy had been expanding nicely and that its GDP growth would stand at around 3% in 2020.

The ceiling for the government spending in 2020 had been set at EUR 10.45 billion and coalition officials agreed today to stick with it. The talks on the ceilings for individual departments also concluded last week.

"We're committed to drawing up the two budgets in line with our domestic fiscal rules and our priorities, which are development, welfare and wages," the finance minister said.

The appetites of budget users are always bigger than the possibilities and "it's our job to put it in the frame of our economic growth and fiscal rule," he added.

Neither Bertoncelj nor Šarec would go into detail but the issue of too high social transfers was highlighted.

Šarec said the Labour Ministry was a very big budget user. People have a hard time accepting the fact that the monthly minimum wage matches monthly welfare allowance, he said.

"It's clear that the measures introduced during the crisis do not make sense today. But if the economic situation deteriorates, a different kind of measure will be on the table," Šarec said.

The bill abolishing a special bonus for welfare recipients engaged in part-time work is already in parliamentary procedure, but the head of the Modern Centre Party (SMC) deputy group, Igor Zorčič, said there was no particular eagerness about this, even within the coalition.

Statements after the meeting suggest that the new budget documents will allow for the renovation of cultural buildings, investments into development, and defence.

Šarec expressed regretted that there were so many legal restrains. The dynamic part of the budget is extremely small, mainly because of the fiscal rule. "We have the most rigorous fiscal rule in the EU and this is something we should discuss," the prime minister said.

Šarec also said the opposition Left had not promised to support the budget yet.

The Left, which supports Šarec's minority government, made its support for the budget conditional on the implementation of an agreement to abolish to-up health insurance this year.

The Left has also been criticising the government for raising defence spending. But Šarec said today that if Slovenia has an army it must be well equipped, also because of the country's international commitments.

"We cannot simply abolish the army if the Left says we don't need it," he added.

In contrast, Defence Minister Karl Erjavec thinks defence spending should be higher than 1.08% of GDP as planned for next year. He said the army must be modernised regardless of Slovenia's commitments to NATO.

Šarec, who had indicated he may seek a confidence vote on the budget documents for 2020 and 2021 as a way of checking support for his minority government, has not reached a final decision on the matter yet.

The coalition wants the budget documents to be backed by 46 MPs to avoid being overrun by a veto in the upper chamber. But in order to secure such a support, it will need to get the Left or some other party on board.

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