The Slovenia Times

Fiscal Council says action needed this year


"In 2019 it is necessary to prepare and adopt measures that will appropriately address long-term challenges, especially concerning demographic change, and contribute to a lasting improvement of public finances while raising potential output," the fiscal watchdog said in a report.

On the expenditure side, the Fiscal Council recommends streamlining and improving the efficiency of the public sector, on the revenue side it suggests making the tax system more efficient.

The report suggests Slovenia reached the peak of the economic cycle in early 2018. While forecasts suggest that in 2019 growth will slow by about a percentage point compared to last year, it says that the pace could be significantly slower than forecast.

"Risks stem in particular from uncertainty in the international environment, which can have a major impact on small, open economy such as Slovenia's," the report says.

The warning comes just as the government is gearing up to adopt a revised budget for 2019, its first major budgeting exercise since taking office in autumn.

Due to pay rises in the public sector and higher transfers to municipalities, it is widely expected that the revised 2019 budget will involve significantly higher spending and a significantly lower primary surplus than initially planned.

In mid-December the Fiscal Council already warned the government about a looming deficit that would return Slovenia back to structural deficit zone.

The government retorted that prudent fiscal planning was not an end in itself, it was merely the groundwork of a responsible economic policy, adding that its goal was to stimulate long-term economic growth and secure fair income distribution.


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