The Slovenia Times

MPs Told 2016, 2017 Budgets Focused on Growth, Deficit Cuts


Finance Minister DuĊĦan Mramor said Slovenia was on the path of economic recovery, reiterating the government's determination to reduce the deficit.

Cerar told the MPs that Slovenia's macroeconomic indicators had been positive lately. The unemployment rate is dropping, there are more employed people than a year ago, and the at-risk-of-poverty rate has stabilised, he added.

The prime minister also noted that the economic growth rate was on an increase and that projections were also positive. He announced that some of the austerity measures would be released next year and that a majority of ministries would get more money than this year.

But Cerar warned that the government must not forget about the goal of structural balance in the medium term, which is why it should keep a "healthy dose of restrictiveness" when planning expenditure.

The draft budgets follow the commitment to reduce the budget deficit significantly below 3% of GDP. "Despite of this, they propose expenditure that will still encourage growth and preserve the social situation of the weakest part of the population."

Among those who will enjoy more money than this year, Cerar singled out the police and judiciary, adding that the government would continue to invest in the promotion of employment of young people and long-term unemployed.

He noted that the drawing of EU funds from the new financial perspective would start in 2016, adding that the investment priorities for the next two years were the entrepreneurship and competitiveness policies, science, information society, labour market and education.

Mramor also pointed to the government's commitment to reduce budget deficit, noting that it would be reduced below 3% of GDP already this year, meeting the requirements to end the excessive deficit procedure after five years.

Next year deficit is to be reduced to EUR 789m or 1.98% of GDP, the finance minister added, noting that the planned revenue stood at EUR 8.63bn, with the planned expenditure standing at EUR 9.42bn.

"We followed the principle of further reduction of deficit, which is why we have set narrow priorities," Mramor said, adding that the reduction would be gradual, as a too quick reduction of public spending would affect the ongoing economic recovery.

The minister warned that the share of GDP available for domestic spending still lagged behind the share in pre-crisis years. "This means that the rights cannot be returned to the pre-crisis level, because there is considerably less money available."

What is more, interest expenditure is increasing, which further reduces other expenditure, Mramor said, adding that certain austerity measures in the field of social protection would be released in 2016.

According to him, the government has proposed certain additional measures to increase revenue, such as certified tax registers. "We will also continue with the project of restructuring of the tax wedge with the purpose of reducing taxation of labour."


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