Slovenian Government updates 2013 Deficit Estimate from 2.8% of GDP to 4.98%

Based on estimated budget revenue and expenditure until the end of 2013, Slovenia's deficit is to stand at EUR 1.8bn at the end of the year, which amounts to 4.98% of the country's GDP. The figure is much higher than 2.8% envisaged in the 2013 budget when passed by the previous government.

The budget initially envisaged EUR 8.61bn in revenues and EUR 9.62bn in expenditure. The new deficit estimate comes relatively close to the February EU forecast, which says Slovenia will see a deficit equivalent to 5.1% of the country's GDP in 2013.

Without adopting any new measures, Slovenia would collect EUR 365m less than planned in taxes, especially in VAT and corporate income tax, the government said in a report that has been sent to the National Assembly.

The government moreover estimates that budget expenditure would exceed the figure planned in the budget by EUR 391.8m by the end of the year.

The gap is largely due to the failure to fully implement expenditure-cutting measures, as the government is yet to find a compromise with trade unions on lowering the wage will in the public sector. Moreover, some funds have also been redistributed to accommodate a hybrid loan to the NKBM bank and the needs of cohesion policy, the report says.

The government believes that stricter control of expenditure is only possible with systemic changes, while across-the-board investment cuts and reducing material cost would not be advisable.

Slovenia will need EUR 727.3m to repay interest rates for its loans in 2013, which is EUR 28.5m more than initially planned. In the case that the country issues new bonds, the government believes that additional EUR 70m will have to be made available, raising the total number to EUR 797.3m.

Moreover, an additional EUR 150m will have to be made available for the pension purse due to excessively low expenditure estimates.

Social transfers will cost EUR 55.2m more than the planned EUR 99.7m, the government says, adding that this gap could widen even further by the end of the year.

Slovenia is also more than EUR 106m short when it comes to its contribution to the EU budget. There are only EUR 336.9m available, while Slovenia's contribution is set at EUR 443m.

Source: sloveniatimes.com