SLOVAKIA’s budget deficit by the end of August 2015 decreased by 55.3 percent year-on-year to €1.08 billion.
State budget revenues until the end of August rose by €2.104 billion (29.2 percent) y-o-y and amounted to €9.318 billion. Expenditures increased by €765 million (7.9 percent) to €10.399 billion, the Finance Ministry informed the TASR newswire on September 2.
The annual increase in tax revenues amounted to €1.046 billion (18.1 percent).
“One positive development was recorded in legal entities’ income taxes amounting to €525.6 million; value-added tax amounting to €510 million and consumption tax of €51.5 million,” the ministry informed. A y-o-y decline of €12.6 million was recorded in withholding tax, while international trade and transactions fell by €2 million y-o-y.
Positive developments were seen in revenues from the EU budget – with a €1.2-billion y-o-y increase, according to the ministry. State budget revenues from dividends recorded an annual increase of €112.9 million. Expenditures connected with the state debt decreased by €178 million y-o-y.
Since the first debt “penalty band” was exceeded in 2012 (with Slovakia’s sovereign debt topping 50 percent of GDP), the government has never managed to adopt measures conducive to cutting the debt below the different penalty bands and is instead using one-off measures to reduce the debt, the independent Council for Budgetary Responsibility (RRZ) wrote in its commentary on budgetary goals and responsibility in 2014. According to RRZ, the y-o-y drop in debt in 2014 and a further drop expected in 2015 can be ascribed to one-off measures, too. “They’re mainly revenues from privatisation, private pension funds, dividends from state enterprises above ordinary profits and the use of the state's cash reserves,” it said.
In terms of Slovakia’s net wealth, however, no improvements were recorded, as the falling debt was accompanied by a drop in public sector assets. Apart from this, no progress was attained in setting caps on public expenditures, which are an important instrument in budget management. The government only adopted expenditure limits as part of the implementation of EU rules. The limits on expenditures that are currently in place are only temporary and are determined by the government based on the proposal of the Finance Ministry. Furthermore, there are no penalties and the definition of limits is too wide.
“With respect to insufficient long-term measures to reduce debt below the penalty bands, a functioning instrument to curb expenditures would contribute to a faster consolidation and stabilisation of debt at lower levels,” reads the report, as quoted by TASR.
On the other hand, headway was made in the releasing of required information in the public administration budget for 2015-17; by way of illustration, the calculation of tax expenditure is contained in a separate document. “Nevertheless, the budget continues to omit an analytical outlook of the financial management of state enterprises and enterprises in which the National Property Fund (FNM) has a stake,” according to RRZ.
The provision of information on public finances continued to improve, too.
Slovakia’s sovereign debt was measured at 53.6 percent of GDP as of the end of 2014, thereby placing it in the second (53 to 55 percent of GDP) out of a total of five “penalty bands”.