The Slovenia Times

Govt maintains budget plans in line with fiscal rules


The European Commission's methodology for assessing the fiscal effort seems to be at the heart of the diverging views.

"Given the existing risks, the government will monitor public finance developments and propose appropriate measure in time," the government wrote after the Fiscal Council, an independent body tasked with monitoring government spending, published its first report earlier in the day.

The council, set up in March this year after Slovenia subscribed to the EU-driven "golden fiscal rule", argued "a fiscal balance that would merely equalise budget expenditure with revenue is not enough". It called for "a structural balance factoring in the issues that Slovenia has not yet addressed successfully".

The government responded by saying it was staying true to its gradual and moderately restrictive fiscal policy, limiting expenditure growth despite the higher than expected GDP growth and good macroeconomic trends.

"The government expects to further reduce the nominal deficit in the coming three years and get to a surplus of 0.8% of GDP in 2019."

It argued that the mid-term fiscal policy remains in line with the fiscal rule act, as it envisages a balance budget, meaning compliance with the Stability and Growth Pact when taking into account Slovenia's situation in the growth cycle.

While the council highlighted as problematic the structural effort in 2017, the government rejected this by reiterating its disagreement with the European Commission's methodology for calculating countries' output gaps.

Speaking of nonsensical figures, Finance Minister Vraničar Erman explained in the past that the results of the methodology suggest Slovenia's economy is overheating and while the Commission agrees this not to be the case, it says it cannot change the methodology just because of Slovenia.


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