Budgets for next two years marked by crisis measures

Ljubljana – The budgets for the next two years, adopted by the government on Wednesday, will be strongly marked by post-Covid measures and the deepening energy crisis. Finance Minister Klemen Boštjančič asserted that despite demanding circumstances the government would strive to ensure prosperity, including by helping the economy.

The 2023 budget was passed by the National Assembly last November, but the government adopted some changes today. It also adopted the 2024 budget proposal and the bill and other documents required for budget implementation.

The package needs to be sent to the National Assembly by Saturday.

“2023 will be marked by the financing of measures to mitigate the effects of the Covid-19 epidemic, while sufficient amount of funds will also need to be secured for measures offsetting price hikes,” Boštjančič told the press after the cabinet session.

This is why the government has set the rules on how these funds should be spent and will not be able to be spent on anything else than the measures that the National Assembly will introduce with emergency legislation, he stressed.

The 2023 budget envisages EUR 13.4 billion in revenue, while expenditure should reach EUR 16.7 billion, which is 25% more than planned in the original budget adopted last November. Thus, a deficit of EUR 3.3 billion is envisaged or 5.3% of GDP.

Expenditure is expected to rise compared to the existing budget plans on account of mostly emergency measures (+1.86 billion), healthcare (+335 million), education and sport (+228 million), social security (+195 million) and environment protection and environment infrastructure (+141 million).

A year later, revenue is expected to climb to EUR 13.8 billion and expenditure is to drop to EUR 15.5 billion, putting the deficit at EUR 1.7 billion or 2.6% of GDP.

Admitting that the planned deficit is high, the minister stressed that the government had allocated a lot of money to mitigating the energy crisis and price hikes. He noted that the deficit would be lower in 2024 than next year.

Compared to the budget adopted in November 2021, the Health Ministry’s budget will see the highest increase, going up by 77%. The Finance Ministry follows with 49% more funds and the Economy Ministry with 44.3% more.

The Ministry for Environment and Spatial Planning will get more than 34% more funds and the Ministry for Labour, the Family, Social Affairs and Equal Opportunities almost 23% more.

Other ministries will see their budgets going up by a few percent, except for the public administration and justice ministries, which will receive 5.7% and 1.8% less funds than was planned last November, respectively.

As the government agreed at one of its previous sessions, the 2023 and 2024 budgets will focus on healthcare, green policies and sustainable development. Boštjančič said projects supported by EU funds from the recovery and resilience mechanism would be in the forefront.

“The focus of economic and budgetary policies over the next two years will be intertwined with measures to alleviate the price hikes and the implementation of structural measures to increase the resilience of the economy, supported by investment in key areas,” he announced. Quite a lot of money is to be allocated for investment.

According to a decision adopted by the European Commission, a derogation from the fiscal rule will be allowed at least until 2023.

The proposed changes to the decree on the maximum spending of all four public purses thus raise the ceiling on general government spending to EUR 30.1 billion in 2023 and to EUR 29.6 billion in the following year.

Under the draft bill on the implementation of the 2023 and 2024 budgets, the lump sum that the state pays to municipalities is to raise by EUR 22 to EUR 667 per inhabitant for both years.

Municipalities claim this is significantly too low, but Boštjančič assured today that the level of the lump sum was in line with the legal basis and also included the foreseen increase in public employees’ salaries, if an agreement was reached with the trade unions.

The budget implementation bill also sets the amount of the annual bonus to be paid out to pensioners in 2023. It will be EUR 5 higher than this year and will range from EUR 145 for those receiving more than EUR 1,120 in monthly pension to EUR 455 for those receiving under EUR 600.