The Slovenia Times

EU Okays Slovenia's Draft Budget, But Plans New Imbalances Review



"While the draft budgetary plan envisages a timely correction of the excessive deficit as the headline balance is projected to be brought below 3% of GDP in 2015, the recommended fiscal effort in structural terms is not expected to be met," the Commission wrote on Friday.

It invited the Slovenian authorities to "stand ready to take the necessary measures within the national budgetary process in order to ensure that the 2015 budget will be compliant" with the Stability and Growth Pact.

The Slovenian Finance Ministry welcomed the assessment by the European Commission that the budget plan for 2015 is broadly compliant with EU rules, saying that it had expected such an assessment.

The Commission has warned that unexpected one-off expenses could undermine the efforts to eliminate the excessive budget deficit and keep it below 3% of GDP in the long run.

While concrete examples were not mentioned, future expenses that can fall within this category are compensations for the erased and ex-Yugoslav savers of the defunct LB bank.

Slovenia was also called upon to speed up the implementation of the structural part of the fiscal recommendations issued the country in the context of the 2014 European semester.

Unofficially, these include a law on the implementation of the fiscal rule of a balanced budget, a comprehensive review of public spending and securing budget savings in 2015 and beyond, as well as a pension and healthcare reform in the long run.

Brussels also expects that the planned measures to reduce the excessive general government deficit in 2015, including cuts in expenditure for wages in the public sector, will be implemented.

The Finance Ministry said in its response that the government is aware of the problem and that it understands the call for a faster implementation of structural fiscal recommendations.

The Commission divided the member states in three groups depending on whether they comply with EU rules. Slovenia was put in the middle group that broadly complies, together Estonia, Latvia and Finland.

Belgium, Spain, France, Italy, Malta, Austria and Portugal are at risk of non-compliance and the Commission gave France, Italy and Belgium until March to fix their budgets or risk penalties.

Slovenia has been under close scrutiny since 2009 due to excessive public finance deficit. The country was given until 2015 to reduce the deficit to 2.5% of GDP.

The Commission however warned in March that Slovenia might not be able to meet the deadline. It forecast Slovenia's deficit at 2.9% of GDP next year, while the government expects it to be at 2.8%.

Meanwhile, Slovenia was today put on a list of 15 countries to be subjected to in-depth checks regarding potential excessive macroeconomic imbalances. Slovenia has been monitored before and is the only member state to have received two consecutive warnings.

In the analysis, expected to be presented in March, the Commission will assess whether the imbalances in Slovenia are decreasing, persisting or increasing, and decide on this basis on whether to start proceedings - these begin with a plan for measures while they can eventually also lead to financial penalties.

"The government is aware that certain imbalances established as part of the last year's cycle have not been full eliminated, because this is a lengthy process," the ministry said, adding that a series of measures aimed at reducing imbalances are being planned.


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