Budget revenue is projected at EUR 8.627bn and expenditure at EUR 9.417bn for 2016; for 2017 revenue is planned at EUR 8.705bn and expenditure at EUR 9.423bn, Finance Minister Dušan Mramor revealed after the cabinet session.

This compares to revenue to the tune of EUR 8.56bn and expenditure of EUR 9.95bn projected in the supplementary budget for this year.

Mramor said that substantially higher projected revenue for both years would enable a rise in funding for most government departments, coupled with the cut in deficit in accordance with Slovenia's commitments to the EU.

"These are the first two budgets that'll allow us to breathe a bit easier," the finance minister said.

The budget deficit by the cash flow principle is projected to stand at 1.98% of GDP in 2016 and at 1.74% of GDP in 2017.

By the methodology used by the EU, the deficit is to drop to 2.24% of GDP in 2016 and down further to 1.75% of GDP in 2017.

Mramor said the budgets would thus be in compliance with the EU fiscal stability treaty and the national fiscal rule implementation act. "This means gradual adjustment of the deficit to the structural deficit, which equals zero."

Since the revenue for the next two years is much higher than in this year's budget, the proposals follow the principle that the higher economic growth they reflect is in part used to bring down the deficit and in part to increase revenue and boost new growth.

He said the highest priority, which required a lot of talks and relocations, was "safety of people and property" in view of the refugee crisis, so more funding had been secured for the police force and healthcare.

He also listed flood safety, the judiciary, infrastructure and education as priorities, adding that solutions had also been found to secure sufficient funds for culture.

The budgets envisage gross public sector pay to increase only up to as much as the increase in productivity in the private sector as determined in the social pact. "It [productivity] is planned to rise by 1.7% in the private sector over the next two years."

The budgets project "even higher wage bill, which will however be allocated for additional employment, especially of young people". The headcount has decreased in recent years, which impacted on youth employment and fast ageing in the employees structure.

Pensioners will benefit from extraordinary adjustment in 2016 on the basis of the economic growth in 2014.

Investment in 2016 will return to the 2013 level after being very high in 2014 and 2015 because of the stepped-up EU fund phasing in the expiring EU budget framework.

The government today agreed the final details of the draft budgets, while it will adopt the accompanying documents at its next session.

Some social transfers frozen by the omnibus fiscal austerity act in 2012 will be increased, while some will remain frozen for another couple of years, with the details available at the next session.

The government also discussed tax reform aimed at restructuring tax burdens, and the real estate tax. "We will take up to a fortnight more to take a final decision how to transform this latter tax," Mramor said.

He would meanwhile not disclose the figures in the latest economic forecast drawn up by the Institute of Macroeconomic Analysis and Development, as these will be presented at a news conference on Monday.

The budget documents will now undergo detailed scrutiny by the National Assembly in a procedure that usually takes at least two months before the budgets are finally passed.

The government also faces further negotiations with the stakeholders, including public sector trade unions and municipalities.