Budgetary Responsibility Council: Savings Not Yet Supported by Measures

Bratislava, 18 September (TASR) - Savings on the expenditure side of the budget should reach €1.3 billion, according to the Finance Ministry, but this figure is not yet supported by specific measures, the Budgetary Responsibility Council (RRZ) pointed out on Thursday, adding that it is not yet in a position to assess if the entire consolidation package is realistic. The adjustments presented so far should lead to a reduction of the deficit by €282 million, of which €130 million is savings of local authorities, meaning that information on measures worth €1 billion is still lacking. "Part of the package on the 'expenditure savings' side should also include the yet unconfirmed reimbursement of almost across-the-board energy subsidies or other budget expenditures from EU sources in the amount of €435 million. Energy subsidies as such, however, can be considered a deconsolidation measure, thus the compensation via a possible reimbursement only represents the neutralisation of their negative budgetary impact, thus it is not an austerity measure and shouldn't be counted in the consolidation package," stated RRZ. After adding the energy subsidies, even if they were reimbursed from EU funds, the total size of the package would be €2.3 billion or 1.6 percent of gross domestic product (GDP), not the declared €2.7 billion, according to the council. "If that reimbursement doesn't take place, the impact of the package on public finances would be only €1.9 billion (1.3 percent of GDP). Finally, if the as yet unspecified savings of the projected amount aren't delivered, the benefit of the package would amount to only €1.3 billion (0.9 percent of GDP)," said the council. The budgetary council reproached the government that despite the call for the measures to be dominated by savings on the expenditure side, most of them are still on the revenue side of the budget, as in previous years. Moreover, more than half of the revenue measures, according to the council, directly burdens economic activity. In fact, they are mainly aimed at increasing the tax-levy burden on labour, through an increase in the rate of health-care levies, an increase in social levies paid by sole traders or an increase in the progressivity of the personal income tax. The fiscal council also pointed out that some of the measures presented are of a one-off or temporary nature and there is a risk that some of the as yet unspecified expenditure savings will also be one-offs. Thus, there is a significant risk that the impact on sustained improvements in public finances will be much lower than the declared amounts of consolidation. am