BRATISLAVA, January 2, (WEBNOVINY) – The state performed better last year than planned in the state budget. As data disclosed by the Finance Ministry show, the state budget gap of the Slovak Republic reached EUR 3.276 billion as of late December, which is a decline by 26.2 percent from the previous year. Compared with the deficit projection in the state budget of EUR 3.81 billion, the actual gap is lower by over 0.5 billion euros.
The better than planned budget deficit was achieved on lagging revenues as well as spending. Revenues in the budget were overestimated in particular due to planned transfers from EU funds. The Finance Ministry projected the EU resources according to demands of individual ministries in a way that if not drawn to full extent, the budget would not be threatened. The reason behind it is that EU transfers are connected with expenditures for co-financing from the state budget.
Total budget revenue grew 10.1 percent y/y to EUR 12.002 billion, which is 91.3 percent of the annual projection. Total expenditures of the state administration moderately decreased, going down 0.4 percent to EUR 15.278 billion. As of late December, the state spent 90.1 percent of the total expenditures projected for this year.
Tax revenue, which makes up a better portion of the state’s revenue, grew 9.3 percent y/y to EUR 8.7 billion representing 99 percent of the overall plan. Corporate income tax revenue developed most positively, rising 28.9 percent y/y to EUR 1.62 billion. The collection of value-added tax, which accounts for the biggest part of tax revenue, amounted to EUR 4.753 billion, which was 2.2 percent more than a year ago.
Excise tax revenue went up 2.9 percent y/y to EUR 2.002 billion, lagging 4 percent behind the annual projection. On the other hand, revenue from withholding tax declined 6 percent to EUR 143.3 million. Personal income tax revenue, which is almost fully transferred to budgets of self-governments within fiscal decentralization reached EUR 112.1 million, down 19.4 percent y/y.
Non-tax revenue of the state budget soared by 26.1 percent to EUR 858.8 million in yearly terms, already exceeding the projections by 22.2 percent. Grants and transfers rose 8.2 percent to EUR 2.443 billion y/y, accounting for 66.8 percent of the overall plan. Although transfers from the European Union, which account for the major part of these revenues, grew 42.4 percent to EUR 2.031 billion in yearly terms, they met the annual projection to only 60.7 percent.
Current expenditures comprising expenditures on current operations of state offices and wages of public sector employees traditionally dominated the expenditure side. These expenditures dropped 1.4 percent y/y to EUR 12.783 billion, 9.1 percent behind projections. Capital expenditures increased by 5.4 percent to EUR 2.495 billion, but remained 13.7 percent behind plans.
According to the state budget law adopted by parliament, the state budget was to have EUR 13.148 billion in revenue and EUR 16.958 billion expenses in 2011. The budget deficit is expected to be EUR 3.81 billion. The deficit of the general government as a whole, considering all public institutions, not only the state, should be 4.9 percent of GDP.
Cabinet’s latest projection assumes next year’s state budget deficit to reach 4.6 percent of GDP although the original plan counted on a 3.8-percent deficit. The initial plan has crashed because of the deepening financial and economic crisis as well as collapse of Iveta Radicova’s government. If the actual economic development were even worse that the Finance Ministry expects next year, which prognoses of several institutions indicate, the budget gap could be even wider next year.
SITA
