Parliament Passes Budgets for 2020, 2021

By , 22 Nov 2019, 14:00 PM Politics
The National Assembly / Parliament building in Ljubljana The National Assembly / Parliament building in Ljubljana JL Flanner

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STA, 22 November 2019 - The National Assembly voted 49:41 on Friday night to pass the budget acts for 2020 and 2021, in what was the first major vote for the minority government and an important test of the coalition's strength. The populist National Party (SNS) and both minority MPs provided the missing votes.

The vote was on the agenda just weeks after the Left walked away from an agreement that provided the government with a parliamentary majority, raising the possibility that the budget bills will not be adopted in time.

Tellingly, the opposition staged a show of force in committee last week when it joined forces to outvote the government and swell budget spending, mostly on account of a EUR 140 million increase in the annual budget transfer to municipalities.

But with the help of the SNS, the coalition voted down the amendment to bring the budget within the framework that the Finance Ministry says complies with the constitutional balanced-budget rule.

Budget revenue and expenditure will be at record levels both years, a reflection of the long period of economic growth, but slightly below original plans, as the treasury heeded warnings that growth is gradually slowing down.

For 2020 budget expenditure is capped at EUR 10.36 billion and revenue at EUR 10.77 billion, making for a surplus of EUR 415 million.

In 2021 expenditure will rise to EUR 10.45 billion and revenue is projected to climb to EUR 11.1 billion, with the surplus swelling to EUR 657 million.

Finance Minister Andrej Bertoncelj, who had threatened to resign unless the budgets remain within the treasury's bounds, said after the vote that spending was focused on social issues and development. He said the budgets would "improve the prosperity of everyone".

While the EU Commission has recently said Slovenia's budgetary plans for next year contain risks that could lead to non-compliance with EU budget rules, Bertoncelj said the budgets were putting Slovenia on track to leave the group of countries at risk of breaching EU budget rules.

As for the political aspect, Bertoncelj said the budgets were "a major step forward" that "shows the coalition is strong". "It's important that we have the budgets and that the government continues doing its job."

Whereas the coalition was able to deflect the increase in budget transfers to local communities, the opposition nevertheless squeezed through amendments that raised spending by a few million.

Even the coalition contributed the votes earmarking EUR 400,000 to the Celje Mountaineering Association which will be spent on rebuilding two mountain huts destroyed in separate fires last year and last month.

An additional EUR 6 million has been set aside for investments in preschool buildings and EUR 5 million for remediation works on a landfill in the Savinja Valley.

And a million euros each this year and next will be spent restoring the Žiče Charterhouse, an earmark proposed by the SNS. Žiče is located in the district where SNS leader ran in the 2018 election.

These amendments were confirmed as part of the budget implementation act, a technical piece of legislation that gives the government authority on budget management and borrowing.

This act also contains a ceiling on borrowing, which is set at EUR 1.6 billion for 2020 and EUR 2.7 billion for 2021. The majority of the borrowing will be used to refinance existing debt in order to reduce debt servicing costs.

The government will also be allowed to issue state guarantees of up to EUR 800 million in both years.

Most of the guarantees will go towards building a new rail track to the Koper port, but a quarter is to be spent on a special guarantee for housing loan that the government plans to put in place after the central bank severely tightened rules on consumer lending.

The budget package includes a special piece of legislation that curtails pay rises in the public sector, adopted after the government forecaster, IMAD, downgraded its GDP growth forecast for the year and warned that the economy was slowly cooling down.

To shave an estimated EUR 100 million off the annual public sector wage bill, senior civil servants will forfeit a portion of performance bonuses and limits will be put in place regarding payment for higher workload.

The act also includes a 6.5-euro across-the-board increase in pensions in December 2020, assuming GDP growth exceeds 2.5%; the latest forecasts indicate Slovenia's economy should expand by just under 3% next year.

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