The Slovenia Times

Finance Ministry says EU Commission's forecast a warning

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According to the Commission, the country's structural budget deficit is to rise from 1.9% in 2016 to 2.1% in 2017 and to 2.6% in 2018.

The ministry said that this assessment was based on the assumption that no additional measures would be taken in the next two years to balance the budget.

The assessment should thus be understood as a warning about the need to continue with structural changes for short-term and long-term fiscal management of healthcare, pensions and public sector pay, the ministry added.

The European Commission meanwhile upgraded its growth expectations for Slovenian economy, forecasting on Monday a 3% GDP increase both for 2017 and 2018.

"The more favourable forecast of the European Commission also means that Slovenia is in the highest phases of economic cycle, which means the need for a quicker reduction of the nominal deficit," the ministry said in a press release.

The production gap (difference between potential and actual GDP), as assessed in Brussels, will be positive in 2017, which means that the economy is already overheating, but the ministry pointed out the assessment was not borne out by macroeconomic indicators.

"The ministry believes that the Commission's assessment regarding the positive production gap in Slovenia in 2017 and 2018 is questionable," the release says.

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