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| Draft budget could be more ambitious, analysts say |
| Bratislava, 12.10.2016 |
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| The Government sent the draft of the general government budget with a surplus for 2019 to parliament.
Lacking ambition or a missed opportunity. This is how analysts often assess the draft of the general government budget for 2017-2019. While the growth dynamic of Slovakia’s economy is predicted to remain sound, the government forecasts a surplus budget only for 2019. They also see more room for consolidation of public finances.
The budget predicts the general government budget deficit will decrease to 1.29 percent of GDP in 2017 and to 0.44 percent in 2018. Slovakia should achieve the first surplus budget in 2019 when it should amount to 0.16 percent of GDP.
“This plan is realistic,” said Finance Minister Peter Kažimír after the government advanced the draft of the general government budget for 2017-2019 to parliament at its October 5 session. “Already next year we will register a primary surplus, i.e. when we deduct our debt servicing from our expenditures, we will be in surplus and not in deficit. Thus this is a confirmation that we are on the right path to a balanced budget.”
State budget for 2017
Part of the general government budget for 2017-2019 is also the draft state budget for 2017. Budgetary revenues are projected at €15.415 billion and expenditures at €17.432 billion leaving the budget in a deficit of €2.017 billion.
The budget is based on the latest forecast indicating that the government may collect €560 million in taxes next year, more than originally expected, and more than the latest macro-economic prognosis of the Finance Ministry from September. It assumes that Slovakia’s economy will grow 3.5 percent next year. The ministry expects that the negative impact of Brexit on economic growth of Slovakia estimated at 0.2 percent of GDP will be compensated for by increased exports from Slovakia. Investment activities will be supported by construction, the automotive sector and an increase in public investments.
Employment is also expected to grow by 1.5 percent and 34,000 jobs next year. The jobless rate should drop to a historical low of 8.5 percent and continue decreasing in the following years. The increase in nominal salaries will speed up to 3.5 percent, resulting in a rise of the average nominal wage to €940 a month next year, the TASR newswire reported.
The draft budget already counts on tax changes that parliament still needs to approve. These include the reduction of the corporate income tax from 22 to 21 percent, the increase of flat-rate expenses the self-employed can deduct to 60 percent with a cap at €20,000, but also the introduction of a 7-percent tax on dividends in addition to new tax duties for insurance companies.
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Address : Euro-Brew Ltd., Hlboká 22, 917 01 Trnava, Slovakia
Tel. : +421 33 53 418 53, Fax : +421 33 53 418 52, E-mail : info@eurobrew.sk |
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