BRATISLAVA, May 10, (WEBNOVINY) — Although Slovakia has managed to reduce the state budget deficit so far this year, the budget development process could be even better. Finance Minister Ivan Miklos explained that several negative factors have surfaced, which will increase spending above levels approved in state budget. These negative factors include rising debts of health care facilities, a situation incurred by the revitalization of railway companies and shortfall in revenues from the originally assumed sale of emission allowances.
On the other hand, development in some areas is better than expected and overall fulfillment of this year’s budget thus meets expectations, according to the minister. “Some areas are developing very well while others not as well as expected,” concluded the minister at a press meeting on Tuesday. Development of government spending proves that the state is managing to achieve some savings, according to Miklos. State expenditures reached 93.1 percent of the volume registered in the same period of last year as of the end of April.
The minister predicts that the aforementioned negative impact will have an impact on this year’s budget of about EUR 370 million. The continuing growth of indebtedness of health care facilities is to contribute by about EUR 80 million. The minister believes that the measures adopted so far are insufficient and debts of these facilities are growing faster than the approved budget expected.
The budget also counted on lower expenditures on revitalization of railway companies. Owing to delayed adoption of revitalization projects and their softer effect, expenditures on railway companies will be EUR 215.6 million higher than in the passed budget. The budget counted on revenues of EUR 100 million from sale of emission allowances. However, they will not be sold this year because of the negative situation on the market in the wake of the catastrophes in Japan. If these emissions are not sold, expenditures of the environment fund should be EUR 30 million lower and the overall impact of unsold emission quotas would thus reach approximately EUR 70 million.
On the contrary, the Finance Ministry predicts that positive impact could improve the budget performance by about EUR 300 million. This sum does not include the generally better development in tax revenues, which the ministry expects to see this year. Because of facilitation of later submission of income tax returns of private individuals, the ministry will not be able to specify the sum before July of this year.
The Finance Ministry counts on lower expenditures on co-financing of EU structural funds compared with the passed budget by EUR 95 million, since they are being drawn at a slower pace within the above-mentioned extra EUR 300 million that the ministry expects to see in the state budget. The ministry is also counting on savings in expenditures on the state debt service totaling about EUR 90 million and EUR 70 million higher revenues from dividends, under the condition that the dividend payout from the profit of Slovak Telekom, which the majority shareholder Deutsche Telekom refused at the shareholders’ meeting, is arranged. “We will hold talks regarding Slovak Telekom’s dividends,” said Miklos.
According to the state budget law adopted by parliament, the state budget should have EUR 13.148 billion in revenues and EUR 16.958 billion expenses in 2011. The budget deficit is expected to reach EUR 3.81 billion. The deficit of the general government as a whole, including all public institutions, not only the state, should be 4.9 percent of GDP. The government plans to squeeze the deficit to below 3 percent of GDP in 2013.
SITA