BRATISLAVA, July 30, (WEBNOVINY) — A better part of the ambitious fiscal consolidation plan for next year, representing 2.5 percent of the gross domestic product, should go towards the costs of the general government expenditures. It seems for the time being that most of this amount will fall on spending cuts and a smaller portion on bolstered revenues; the proportion could be two-thirds to one-third, estimated Finance Minister Ivan Miklos at Friday’s news conference.
Miklos underscored that the consolidation of the general government finances is the primary goal of the incumbent Cabinet and will be given the priority over all other measures. The consolidation planned for next year at about 2.5 percent of the gross domestic product, which is about EUR 1.7 billion, complies with recommendations by the International Monetary Fund. The measures should be balanced in order not to undercut the economy but to reduce the general government gap sufficiently. Broader consolidation might endanger the economic growth but a lower one would put at risk the overall aim to lower the gap below 3 percent of the GDP by 2013. Therefore, this is a matter of key importance, stressed the minister.
For the first time, Miklos sketched out specific measures as the bedrock for the consolidation. The suggested caps on expenditures in budgetary chapters for next year prove that the Cabinet intends to base the deficit reduction on savings. These days, the ministry has been sending the drafts to the individual authorities. Among other measures to lower the deficit, Miklos mentioned higher revenue from the sale of emission quotas in transparent contests, adjustment of Cabinet reserves, and more efficient use of the EU funds.
The Finance Ministry passed a measure to ensure more efficient state debt service and management of liquidity. Thus, the Finance Ministry’s Debt and Liquidity Management Agency (ARDAL) should use free sources in the State Treasury to finance the state debt to the full extent, which will reduce the costs of the debt service. The Cabinet plans to save about EUR 10 million in the second half of this year though this measure; more savings are expected in the upcoming years, stated Miklos. Until now, the ARDAL has not always used the sources available in the State Treasury to its fullest extent.
SITA