At regular session on 20th of June, the Government of the Republic of Slovenia approved the draft revised budget of the Republic of Slovenia for 2013.

Macro-economic bases

The main reason for drafting a revised budget for 2013 is the worsening macro-economic forecasts in comparison with the forecasts relevant when the 2013 budget was originally drawn up, when the revenue forecast was assessed too optimistically in view of the current situation.

In the budget adopted for 2013, total revenue was estimated at 8,611.1 million euros, while updated estimates for 2013, which are based on actual revenue in the first five months of 2013, the Summer Forecast of Economic Trends by the end of 2013 published by IMAD, and envisaged amendments to tax legislation show that total budget revenue will shrink by 6.3% in comparison to the previously adopted budget.

A high risk remains that this and next years’ economic activity will be lower than expected. The risk of a much greater reduction in economic activity than previously expected this year is linked to the international situation, both in terms of the situation in Slovenia’s biggest trading partners and the situation in financial markets. The stabilisation of the declining trend depends mainly on the success of the measures to overhaul the banking sector and other planned measures which would ease the credit crunch and help relieve the economy and revive investment.

Budget deficit

The draft revised budget for 2013 continues to pursue fiscal stability, particularly in terms revenue, while expenditure is targeted mainly in terms of re-structuring. In the previously adopted budget for 2013, planned expenditure totalled 9,620.6 million euros, while the budget deficit was expected to reach 1,009.4 million euros, or 2.8% of the forecast GDP. The revised budget envisages expenditure of 9,631,1 million euros, which is 10,5 million more than in previously adopted budget for 2013, which means that the budget deficit will total 1,547.4 million euros, or 4.4% of GDP.

Budget revenue

The revised budget of the Republic of Slovenia for 2013 envisages total revenue of 8,068.7 million euros (542 million euros less than the previously adopted).

Several measures are planned to achieve greater fiscal balance, particularly a change in VAT as of July 2013 and increases in court fees. Planned revenue from the EU budget has also been modified, as the current absorption rate was low due to fewer projects being realised. The revised budget also include additional income from road tax, activities aimed at increasing the efficiency of tax collection and the tax on lottery tickets, although all these will have a significant effect only next year.

Budget expenditure

Regarding expenditure, the revised budget takes into account changes in the economic nature of expenditure and the structure of financing resources. Measures targeting expenditure continue to rationalise expenditure on public sector pay (on which an agreement has already been reached with the unions), the selection and limitation of social transfers, lowering the funds for goods and services and the selection of investment projects (primarily financed from the assigned budget and within EU programmes).

The revised budget ensures funds to cover unexpected or additional commitments due to partially implemented measures restricting some categories of expenditure or the reallocation of funds. On this basis, expenditure are higher by 10,5 million euros to 9,631,6 million euros.

Assigned and EU funds, together with the relevant Slovenian participation, are lower by approximately 168 million euros.

In comparison with the previously adopted budget, the revised budget increases integrated funds by over 2%, while expenditure financed from assigned funds is 17.6% higher, and EU funds and Slovenian participation are 15% lower. The latter takes into account the fact that the implementation of cohesion policy has been delayed for various reasons (bankruptcy of contractors in construction due to the economic crisis, difficulties in acquiring land, long auditing procedures connected to public procurement, etc.), which means that the signing of contracts with contractors was delayed and works began late.

In order to the better use cohesion policy funds, we should highlight the instrument of additional budget commitments for the operational programme of developing the environment and transport infrastructure, strengthening development potential and developing human resources, which is allocated where absorption is expected to be poorer than planned. Additional budgetary commitments will be allocated to new (reserve) projects or added to new calls for selection in order to ensure the timely implementation of new projects with a high level of maturity, which do not present the risk of a loss of income.

Projects financed from additional budgetary commitments will compensate for those where the contract is cancelled or changed due to poor absorption (lower the value of the project). It is estimated that 24 million euros will be needed for additional budget commitments in 2013. The management body is expected to finish a comprehensive overview of projects strengthening regional development potential and developing human resources in the second half of 2013, when it will be possible to allocate additional budget commitments more precisely according to priorities (within operational programmes) and projects.

SOURCE: Ministry of Finance, Public Relations