The government has adopted a draft supplementary budget for this year to allocate €520 million for flood relief measures with Finance Minister Klemen Boštjančič saying there will be no need for further borrowing.

The government went the extra mile to ensure the funds because it is aware of the importance and urgency of rapid aid, and will make sure that the funds are spent carefully, the minister said after the cabinet adopted the revised budget on 10 August.

This is the second time the government adjusted this year's budget, the first time being in the spring to accommodate for the government restructuring with new departments at the start of the year.

Following the extreme floods, several hundred million euros will also need to be secured for the 2024 budget, government officials said earlier.

€300 million of the extra funds will come through redistribution from the financial asset management budget item, where funds are mainly earmarked for the recapitalisation of state-owned companies.

Budget deficit to increase

For the remaining €220 million the government increased budget expenditure, which will result in a somewhat higher deficit.

Currently, the budget for 2023 is projected to have a deficit of €2.9 billion, against a budget expenditure of €16 billion. As a share of GDP, the deficit will increase from 4.5% to 4.9%.

The €300 million will probably not be spent this year but transferred to an extra-budgetary fund aimed at the flood recovery effort in the next years. The fund will be established by the end of the year, the minister said, and will pool funds from other sources as well, including donations.

The early August floods affected two-thirds of the country, wreaking destruction to homes, businesses and road and other infrastructure. Damage is believed to cost several billion euros.

The Chamber of Commerce and Industry (GZS) said data collected so far showed businesses suffered close to €400 million in damage. This includes damage to infrastructure, equipment, materials and the loss of income.

Slovenia will receive €400 million from the EU Solidarity Fund, of which €100 million this year and €300 million in 2024, and the country also has other mechanisms at its disposal to ask for financial assistance.

Legislation amended to facilitate recovery

The government allocated extra funding after the National Assembly passed amendments to the Natural Disaster Relief Act that will facilitate the clean-up efforts.

The key provision is an advance payment to municipalities for flood relief effort totalling 40% of the estimated damage.

The changes envisage covering the entire costs of the emergency effort currently under way as well as retroactively for all natural disasters since the start of the year.

Farmers who have insured their crops will get a 100% advance payment for the lost crops based on the de minimis scheme.

Aid for companies

A state-financed furlough scheme will be put in place to help companies that have been hit by the flooding. Companies that have been affected indirectly will be eligible as well. Workers will get 80% of pay while on furlough.

The state will finance up to seven days of leave for volunteers who join the relief effort following the floods that devastated two-thirds of the country last weekend.

The GZS welcomed the changes as companies were promised they could receive up to 10% of the estimated damage as a prepayment for not being able to do business or their activities being hindered.

The GZS also called for further measures, such as liquidity loans and a moratorium on commercial loans, as well as a deferral of income tax, VAT and contributions for those directly affected.

As many companies want to help the flood-affected companies with donations, they call for legislative changes that would allow tax deductions also in the case of donations between legal persons.