Budget records 1.27bn deficit in first three months of 2021

Ljubljana – National budget revenue in the first three months of the year amounted to EUR 2.4 billion, up 1% year-on-year, while expenditure was up by 37% to almost EUR 3.68 billion for a deficit of nearly EUR 1.27 billion. This compares to a EUR 304.9 million deficit in the same period last year.

As the Finance Ministry announced in its latest update of public finance trends, growing the most on the expenditure side of the budget were wages for employees, subsidies, transfers to individuals and households, and other current domestic transfers.

The ministry noted that the increased expenditure in the first quarter of the year was related mostly to the Covid-19 epidemic and mitigation of its consequences on companies and residents.

The relevant measures cost the budget EUR 830.7 million in the January-March period, and the increased expenditure was also recorded in labour costs in the public sector due to coronavirus-related expenses and bonuses.

Payments of wages and compensations were up by 13.2% to EUR 391.3 million, the ministry said, explaining that this was mostly due to promotions, performance bonuses and other labour costs in the public sector, and risk bonuses.

Expenditure for goods and services was meanwhile down by 6.9% to EUR 170 million, and costs of interest on loans were lower by 12.5% compared to the first quarter of 2020 at EUR 385.6 million.

Subsidies were up by more than 80% to EUR 285 million, including EUR 86.7 million for subsidised furlough and EUR 47.6 million for subsidised wages for quarantined workers.

Transfers to individuals and households more than doubled to EUR 836.1 million, while other current domestic transfers increased by 39.5% to EUR 1.19 billion. Transfers to public institutes were up by 56.6% to EUR 781.8 million.

Budget deficit in the first three months would have been even higher if it was not for a slight increase in revenue, mostly on the account of higher personal income tax revenue and funds received from the EU, it added.

Total tax revenue in the first three months were down 2.2% year-on-year to EUR 1.96 billion, of which personal income tax revenue was up by 12.2% to EUR 407.2 million, also due to payment of bonuses in the public sector.

Corporate income tax revenue was meanwhile down by 5.1% to EUR 201.9 million, the ministry said, noting that this was mostly due to a decline of economic activity that started already in the second half of 2020.

Value added tax (VAT) revenue decreased by 9.6% to EUR 806.3 million due to tax deferrals or payment of tax in instalments, as well as a partial slowdown of economic activity and reduced consumption during the epidemic.

Revenue from excise duties was down by 1.9% to EUR 308.1 million, while the funds received from the EU increased by 16.5% compared to the first quarter of 2020 to EUR 231.8 million.

The consolidated general government budgetary accounts, which consist of the budget, public health and pension funds and local community budgets, had EUR 4.8 billion in revenue and EUR 6.1 billion in expenditure in the first three months.

Revenue was up by 3.3% and expenditure increased by 21.5%, with the relevant deficit standing at nearly EUR 1.3 billion.