Ljubljana - The government confirmed on Wednesday a revised budget for 2022 as it increased revenue by about a billion euros to EUR 12.54 billion and expenditure by around EUR 600 million to a record EUR 14.6 billion. The budget deficit is now budgeted at 3.6% of GDP, down from initially projected 4.4%.

Finance Minister Klemen Boštjančič said the revision was urgent since the budget in its current form was untenable due to additional liabilities stemming from Covid stimulus measures that had not been appropriately budgeted by the previous government.

The revision is also a response to the unpredictable economic and fiscal circumstances created by the fallout from the war in Ukraine and includes additional spending to address the cost-of-living crisis.

Despite the higher expenditure the deficit, at just under EUR 2 billion, will be narrower than initially planned as the economy remains robust for now resulting in higher tax receipts.

The government also wishes to preserve a high level of investment activity, which will be partially financed from the EU's recovery and resilience funds and partially from cohesion funds, totalling about a billion euros, left over from the 2014-2020 financing period.

Revenue has been budgeted higher so that the state and other beneficiaries can successfully draw these funds, Boštjančič said. The final expenditure tally may therefore be lower depending on how much of the EU money is spent.

The supplementary budget comes amidst criticism by the Fiscal Council, which monitors compliance with the fiscal rule and recently said that the revenue windfall should be used to pay down debt instead of financing spending.

Minister Klemenčič said the government was complying with all procedures set down by the law and dismissed the notion that the spending is excessive.

It remains unclear for now whether the budget for 2023 - Slovenia has a two-year budget - will be revised as well. Boštjančič said intense talks were under way. The relevant documents will be put to the National Assembly by the end of the month.