BRATISLAVA, November 2, (WEBNOVINY) — The government has managed to reduce the state budget deficit by nearly EUR 120 million in October. While at the end of September the deficit was EUR 2.586 billion, at the end of October it was EUR 2.466 billion. Following months when the deficit already exceeded EUR 3 billion and approached the annual budgeted amount close to EUR 3.675, the government’s performance improved following the introduction of additional consolidation measures, including the reduction of the contribution to the second pension pillar, but also thanks to transfers from the European Union budget. Compared with the annual budget deficit, the figure at the end of October reached 67.1 percent of its volume. However, was still higher than the deficit at this time of last year, by 5.3 percent. The Finance Ministry published the data on Friday.
The year-on-year deterioration in the deficit for ten months of this year was caused by a slightly faster growth of expenses than budget revenues. Overall revenue of the state increased by 2.1 percent year-on-year by the end of October to EUR 9.502 billion, which is 69.7 percent of the annual budget. On the other hand, the expenditures grew by 2.7 percent and reached EUR 11.968 billion, which is 69.2 percent of the annual plan.
In addition to government’s consolidation measures, gradual taming of the state budget deficit also results from improvement of transfers from the EU budget. In the previous months, late payments from the EU have been one of the biggest problems of the revenue side of the state budget. At the end of October, however, grants and transfers improved year-on-year by about 20.7 percent to EUR 1.891. euros, thereof revenue from the budget of the European Union amounted to EUR 1.511 billion. Although this was still only 49 percent of the annual plan, year-on-year it was lower only by 1.4 percent.
Traditionally, tax revenue that makes up most of the government revenue that at the end of October was about 0.8 percent lower year-on-year at EUR 7.018 billion. Problematic was, in particular, the collection of value added tax, which was lagging behind 5.8 percent year-on-year, reaching EUR 3.606 billion. Compared with the previous year, also worse was collection of excise duties, which together with VAT form the two biggest revenue items in the state budget. Collection of excise duties decreased by 1.8 percent year-on-year to EUR 1.63 billion.
On the contrary, collected corporate income tax after ten months increased by 6.9 percent to EUR 1.474 billion. Similarly, withholding tax revenue increased by 17.6 percent to EUR 139.7 million. In personal income tax, which in the framework of fiscal decentralization is almost entirely directed to the budgets of self-governments, the Finance Ministry posted revenue of EUR 123.4 million. Non-tax revenue fell by 11.1 percent to EUR 592.9 million.
Of the total expenditures, current expenditures accounted for EUR 10.618 billion at the end of October. These mainly finance the functioning of state institutions and public sector wages. Year-on-year current expenditures were 4.6 percent higher and used 71.5 percent of the annual budgeted volume. The government is saving on capital expenditures, which fell 10.1 percent and reached EUR 1.35 billion. Two months before the end of the year, their annual budget has been used to only 55 percent.
The Slovak Parliament approved this year’s state budget with a deficit of 4.6 percent of last year’s GDP. The original plan envisaged a more resolute consolidation, to the level of 3.8 percent of GDP, but the plan was marred by the unfolding financial and economic crisis and also to the collapse of the government of Iveta Radicova.
According to Finance Minister Peter Kazimir, without additional consolidation, there was a real risk that the 4.6-percent deficit this year would not be achieved, especially for weaker performance of tax revenues. The government therefore announced additional consolidation measures for this year. Among them, freezing spending at individual ministries, a reduction in the contributions to the second pillar, as well as other some other additional measures. Without them, according to the government, this year’s government deficit would have reached 5.3 percent of GDP.
According to the approved state budget for this year, the government has budgeted expenditures of EUR 17.3 billion on revenues of EUR 13.6 billion. The state budget deficit should be a little over EUR 3.6 billion.
SITA