On Wednesday (24 September), the approved Consolidation Act does not bring saving, but especially the growth of the state’s income. In particular, companies and residents will suffer from measures to consolidate the income and expenditure of EUR 2.7 billion. MEP Marián Viskupič said it at the SaS press conference on Thursday’s press conference.
“When you increase the state’s revenue, you take people, that’s no saving. This is pulling money out of your wallets. The investigation would be if the government showed where it will save, how many cars it will sell, how many employees it will release, how much it will mean saved wage expenses, ” Viskupič said.
According to Viskupič, the package will have the potential to destroy the growth of the economy. The deputy appealed to Thursday’s data of the National Bank of Slovakia, according to which the economic growth will be only 0.8 % this year and next year 0.5 % of the gross domestic product (GDP).
The deputy also criticized the announced investigation on the side of the state, which, according to the Minister of Finance Ladislav Kamenický (Smer-SD), should save 1.3 billion euros. According to Viskupič, the state will eventually save a maximum of EUR 500 million, as it is not clearly determined where the individual resorts are to save.
Kamenický, at the previous press conference, reiterated that the investigation on the side of the state will be reflected in the proposal of the individual chapters of the state budget, which he would like to submit to Parliament by 15 October. Prime Minister Robert Fico (Smer-SD) added that cuts in public procurement, purchases of goods and services are already scheduled, and business travel should also be limited and, according to the Prime Minister, civil servants have already begun to be dismissed.
The National Bank of Slovakia has an estimate other than the government
The consolidation package of measures for next year will contribute to the improvement of the state of the public budget of approximately EUR 1.6 billion or 1.1 % of gross domestic product (GDP). This effect should be sufficient for the government to meet its public finance goals, the National Bank of Slovakia (NBS) presupposes. At the same time, however, it also assumes that consolidation will have a negative impact on the Slovak economy.
“If the government did not accept another consolidation package, the public finance deficit would increase from 4.9 % of GDP to 5.4 % of GDP. Consolidation, which will ultimately be somewhere around 1.1 % of GDP, should withdraw the deficit next year to 4.3 % of GDP. Realistic, ”said NBS Executive Director Michal Horváth on Thursday.
While the government has declared a consolidation package of 2.7 billion euros, the NBS expects its actual size of approximately EUR 2.1 billion. This stems from its own estimate of the impact of individual measures to which it approaches conservatively. This applies, for example, the impact of new working days on the budget’s income page, but also the estimate of some expenses.
“That is why we are talking about the volume of 2.1 billion euros. It is still a large number and it must be said that this will have a major impact on macroeconomics, growth development, development of consumption, wage development. As a result of this package, it can be expected that the income page will also be affected, ie we are counting on the fact that at least in the short term it will dampen this package of economic activity, so the budget revenue will be lower, ” Horváth approached.
The central bank has reduced the estimate of the growth of the Slovak economy for this and next year, and especially in the next year, consolidation is the main reason. “If fiscal consolidation did not take place, we would expect a gradual acceleration of economic growth, but with the consolidation we expect a slowdown to 0.5 %,“He quantified. However, he stressed that consolidation is essential and any package of measures would have dimmed economic growth.
He also pointed out that the situation is also significantly influenced by the unfavorable development abroad. “If we had the same prerequisites as we had two years ago, the economy would grow 0.4 percentage points (PB) faster, it would be up to 0.8 pc faster next year. In the case of a better international environment, the NBS estimates the deficit could be 0.3 % of GDP this year and by 0.6 % of GDP next year.
According to Horvath, the story of consolidation in Slovakia does not end next year. If further measures were not taken in the future, the deficit will remain around 4 % of GDP after 2026. For these assumptions, the increase in indebtedness in Slovakia would be one of the highest in the euro area. “So there is still a lot of work to work in front of us to stabilize the development of public administration indebtedness. And it is very important that the economy’s stability and financial stability in Slovakia are preserved,” he underlined.
