Finance: RRZ Raises This Year’s Deficit Estimate to 5.2 Percent of GDP

Bratislava, 30 June (TASR) - The Budgetary Responsibility Council (RRZ) raised its estimated public finance deficit for this year to 5.2 percent of GDP (€7.1 billion| in June, representing a negative deviation from the government’s budget target of 0.5 percent of GDP (€614 million), which indicates a moderate risk of meeting the approved budget. “The increase in the deficit by €137 million compared to the May forecast is caused by a shortfall in tax and levy revenues due to lower collection in previous months, as well as the projected economic slowdown,” the RRZ explained in its June budget report. A month ago, it had expected the deficit to be 5 percent of GDP. The most significant negative deviation in the Fiscal Council’s estimate compared to the approved budget is the shortfall in tax and contribution revenues, primarily due to lower expected income from value-added tax (VAT) and corporate income tax. As part of the budget report, the RRZ also estimated the fulfilment of the nominal public expenditure limit set in the approved budget. According to its current assumptions, expenditures falling under the limit will reach €61.1 billion this year. Therefore, the limit approved by Parliament isn't expected to be exceeded, and the risk of not meeting the budget targets fully arises from the shortfall on the revenue side of the budget. „The expected implementation of the expenditure limit has decreased by €234 million month-on-month. Compared to the previous prognosis, spending in the budget has slowed down, while the estimated cost of new measures by local government has decreased. These savings partly offset the negative impact of the shortfall in taxes and contributions on the deficit,“ added the RRZ. lin/mcs