RRZ in May Lowers Estimated Deficit Slightly, But Risks Remain

Bratislava, 29 May (TASR) - The Council for Budgetary Responsibility (RRZ) has slightly lowered its estimate for the public administration deficit this year by €46 million month-on-month due to a lower expected shortfall in tax and levy revenues. The revision follows its budget report — which it updates monthly — in May. However, RRZ continues to estimate the deficit at 4.3 percent of GDP, or €6.1 billion, assuming that the government doesn't adopt any additional measures. "The negative deviation from the government's budget target reaches 0.2 percent of GDP (€248 million), which represents a medium risk for meeting the approved budget," said the council. The most significant negative deviation in the RRZ estimate compared with the budget is a shortfall in taxes and levies amounting to 0.4 percent of GDP, or €635 million, mainly due to lower expected revenues from VAT and corporate tax. "The shortfall compared with the budget has mainly been caused by less favourable economic developments than assumed in the budget. Slower household consumption growth will reduce VAT revenues, while lower nominal salaries are pushing down levies and labour tax revenues," the fiscal council explained. The RRZ forecast deficit for 2026 is 0.1 percent of GDP, or €97 million, lower than the current government estimate published recently in the Annual Progress Report on the implementation of the fiscal-structural plan. The main reason is expected better financial performance by other general government entities. mf/df