BRATISLAVA, November 5, (WEBNOVINY) — The state budget law for 2010 will be corrected in line with a Cabinet’s draft amendment that the Slovak Parliament moved to the second reading on Friday in a shortened legislative procedure.
The reason for the amendment is the discord between the state budget law adopted by the previous government and economic reality. The planned general government deficit of 5.5 percent of GDP in 2010 proved to be unrealistic. Current estimate of this year’s deficit is at the level of 7.84 percent of GDP. Finance Minister Ivan Miklos stated that this year’s result is proof of a very badly compiled state budget. In his opinion, the parameters it was based on are the evidence of it. “The budget was prepared with estimated economic growth of 1.9 percent while in reality it will be 4 percent. Despite this, we have to increase the estimated deficit from 5.5 percent of GDP to 7.84 percent of GDP. This shows as well how tax and other revenue was overvalued,” said Miklos.
The amended state budget this year increases the deficit by EUR 794 million to EUR 4.54 billion. The balance has worsened notably because of a more negative development in tax revenue than originally anticipated. This shortfall is EUR 620.5 million. Another shortfall of EUR 43.5 million is on non-tax revenue.
The previous government of Robert Fico projected budget revenues for this year at EUR 12.531 billion on expenditures of EUR 16.277 billion. The planned deficit was EUR 3.746 billion. Finance Minister Miklos had announced soon after taking up his post in July that the budget in its current form was unrealistic and it would need to be revised. Miklos explained the shortened legislative procedure by saying that it was not possible to estimate the real income and expenditures sooner also due to the political change as well as because of estimating the development of this year. The revision will take effects as of the day of its announcement in the Law Code.
Slovakia’s state budget law had to be modified for the second successive year. Last year, the Ministry of Finance led by Jan Pociatek (SMER-SD) took a similar step when it increased the deficit for 2009 to EUR 3.127 billion, to over three times from the original EUR 1.009 billion. The Finance Ministry responded last year to a significant economic slowdown due to the culmination of a global economic crisis.
SITA