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Budget rebalancing: On paper, everything is under control



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Prime Minister Robert Golob’s optimism at the presentation of the budget rebalance is also confirmed by the data, but they need to be seen in context, says Zdenka Bakalar.

Today, the National Assembly is deciding on the rebalancing of this year’s budget, which brings lower expenditures as well as lower revenues. Prime Minister Robert Dove was very optimistic during yesterday’s consideration of the budget documents, because the deficit is decreasing, the measures to manage the energy crisis have taken hold, and there is no recession anywhere. Zdenka Bakalarwho, as a journalist for Radio Slovenia’s information program, has been following the field of public finances and taxes for many years, said for the program Ob Osmih na Prve that the data corroborates the Prime Minister, but the context is important here:Last fall, when the budget was being prepared, there was fear that there would be no electricity, that gas would run out, prices were running wild, uncertainty was extreme and recession was almost certain. Now we have the data for the first quarter and there really is no recession. Measures to manage the energy crisis took hold, we had 0.7 percent growth and high employment. This certainly inspires optimism.

According to her, the key concern is long-term financial instability, especially in light of the fact that next year the fiscal rule will apply again. “This will be a big problem, although both the Prime Minister and Minister Boštjančič say that everything is under control. Yes, everything is under control on paper, but we will see in practice. In the long term, we have instability due to demography, the population is aging, we are living longer, the birth rate is lower, and this will be a big problem over the years if we do not adapt on the fly. The fiscal rule will be a heavy burden for SLO. So far, we have financed all the measures by borrowing, but now it will be necessary to reduce it. The government has a reduction plan, but next year it will come at the expense of the fact that there will be no more measures to mitigate the energy cost. what about everything else that is still open?

Among the key pitfalls, Zdenka Bakalar mentions the salary reform in the public sector, which is estimated to cost at least 800 million euros, if not even 1 billion. “This is a huge sum, 1.5 percent of GDP, the amount by which the deficit needs to be reduced. If this does not stretch for several years, it will be one of the major problems.” There is also the urgent pension reform, which the government does not yet want to say how it will tackle. “Given that everything that falls short of the pension fund is now financed from the budget, the reform is being postponed, saying – because it will be… Now the health fund is also going down this path.” According to Zdenka Bakalar, Prime Minister Golob’s announcement yesterday about a minimum guaranteed pension of 700 euros and a Christmas bonus for retirees is the right decision, as it concerns the most vulnerable group.

Learn more about what will happen to long-term care coverage, tax reform, and real estate tax in the conversation below with Jolanda Lebar. Subscribe to the podcast.

Source: Rtvslo

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