Kríza nesporne viedla k poklesu daňových príjmov.
Avšak neschopnosť aspoň čiastočne prispôsobiť výdavky príjmovým možnostiam
najmä v roku 2010 je čisto zodpovednosť vlády a vládnej väčšiny v parlamente,
povedal pre The Slovak Spectator dňa 26.7. 2010 Radovan Ďurana z INESS.
NO MIRACLES are on offer from the government of Iveta
Radičová this year when it comes to trimming Slovakia’s large public finance
deficit that may reach 7.5 percent of GDP. The International Monetary Fund
(IMF) does not expect that Slovakia can achieve any significant deficit reduction
this year but strongly recommends that the country reduce the level of its
deficit by 2.5 percent of GDP in 2011.
Slovakia’s new finance minister, Ivan Mikloš, who returned
to this position after a four-year gap, says the 2.5-percent reduction is doable
and this is what his team is aiming for. What is not workable though, according
to Mikloš, is the plan that his predecessor, Ján Počiatek, the finance master
of the previous government of Robert Fico, left him: a deficit target of 5.5
percent for 2010 along with what Mikloš called “disintegrated public finances”.
“The predicted [5.5 percent] deficit is an illusion,”
Mikloš, a nominee of the Slovak Democratic and Christian Union (SDKÚ), said.
“The Finance Ministry under the leadership of Počiatek has already published
[data showing] that the shortfall in tax and payroll tax [revenue] will be €1
billion deeper than they had assumed when designing the budget with a
5.5-percent deficit.”
Nevertheless, Počiatek left the Finance Ministry saying that
the target set by the previous government remained realistic if the new
government “practice what they preach”.
After concluding a ten-day mission to Slovakia on July 19,
the IMF estimated the country’s deficit could climb to as high as 7 or 8
percent in 2010 and stated that consolidation of public finances is one of the
greatest challenges facing the new Slovak government. The Radičová cabinet is
facing the challenging task of squeezing the government deficit under 3 percent
of GDP, the target set by the Maastricht Treaty, by 2013.
“This number, 8 percent, really proves that the new
government is taking over disintegrated public finances,” Mikloš said on July
19, as quoted by the SITA newswire. “Just for illustration I would mention that
Hungary expects a deficit this year of 3.8 percent while Greece is at 8.7
percent of GDP.”
Počiatek’s assessment of the health of Slovakia’s public
budget was different, however. He said in early July, as he was leaving the
Finance Ministry, that “we are not leaving the treasury empty”.
“I’ve accumulated €300 million in one account by putting
together all the reserves we had and now they [the new government] can use it
on whatever they want,” Počiatek said on July 7, after the government of Prime
Minister Fico resigned following the loss of its majority in the June 12
parliamentary election.
Are public finances disintegrated?
Radovan Ďurana of the
INESS economic think tank is inclined toward Mikloš’s interpretation of the
status of Slovakia’s public finances.
“If Mikloš by ‘disintegrated
finances’ means huge deficits reaching 50 percent of tax revenues, then we have
to agree with him,” Ďurana told The Slovak Spectator. “It does not mean however
that the cash flow between public institutions and ARDAL [the Debt and
Liquidity Management Agency] would not be able to secure enough resources to
finance the deficit, for now, of course.”
Počiatek has attributed the increased government deficit to
the global economic downturn but economic observers suggest that while the
crisis shares some of the blame, the sharply rising deficit cannot be ascribed
entirely to that cause.
Eva Sadovská, an analyst with Poštová Banka, said that
Počiatek’s assertion should more correctly state that the economic crisis
deepened the public finance deficit, contending that when the Slovak economy
was generating double-digit growth and few people were thinking about the
possibility of an upcoming crisis, the government should have handled public
finances more carefully and thoughtfully.
Ďurana commented that
the crisis undoubtedly caused the significant drop in tax revenues, but added
that the government’s inability to at least partially adjust its expenditures
to the likely revenue available in 2010 was solely the responsibility of the
past government and the ruling majority in parliament.
Sadovská agreed that in the midst of the crisis it would
have been difficult to positively influence the level of tax revenues. She also
said that higher spending during the downturn could be justified if those
expenditures meaningfully supported the economy but she questioned whether the
former government can properly claim to have made these kinds of expenditures
over the recent past.
The ambition
Mikloš has already announced his goal of decreasing the
deficit by 2.5 percent of GDP in 2011, which given the deficit of 7 percent or
more in 2010 will require a significant reduction in expenditures and a
corollary increase in revenues.
Ďurana believes that
if the deficit this year ends at 7.5 percent of GDP, which amounts to €4.9
billion, then next year it could be reduced to about 5 percent of GDP, or €3.5
billion. On this basis he says that the government must find €1.4 billion in
revenue or expenditure cuts and he believes citizens could generate €0.7
billion of this deficit-cutting amount from higher consumption, higher
employment and higher profitability by Slovak firms.
Ďurana said this
means that about €0.7 billion must be ‘saved’ by the government, which he
believes is possible if the state undertakes effective expenditure cuts, adding
that the government must pass the necessary legislation this year so that it
can begin seeing the benefits of such measures next year.
Sadovská said the 2.5-percent deficit-reduction goal for 2011
is very ambitious but believes it is doable. She commented that meeting this
target would transmit a positive message to the international community and she
urged the government to start as soon as possible to take the necessary steps.
“In order to achieve the ambitious consolidation of public
finances, greater transparency in public procurement will not be enough,”
Sadovská told The Slovak Spectator. “Other measures and reforms will be
necessary.”
Increased tax revenues should not be overestimated, said
Sadovská, because unemployment in Slovakia is dropping very slowly and the
jobless rate will return to its pre-crisis level only in a couple of years.
Caps or tax hikes?
Reports have surfaced that the new government may consider
higher taxes but Sadovská cautioned that there is a risk that higher tax rates
might result in lower government revenues.
Recently the National Bank of Slovakia (NBS) and Finance
Minister Mikloš suggested that one potential measure could be spending caps
which would function as a kind of barrier to prevent an overall increase in the
level of government spending.
“The effectiveness of
this measure would depend on the willingness to strictly keep to it, which, for
example, does not work today in the case of programmed budgeting,” Ďurana said.
“Spending caps present a type of
mid-term obligation to consolidate spending. As such, the caps cannot cut
spending but only suggest how much should be saved in a given year. If the will
to respect these caps is missing their effect will be minimal.”
Regarding the
possibility that there is no reduction in expenditure, Ďurana said that the
government might take a status quo position and only look at how the growth of
tax revenues and GDP will reduce the size of the deficit.
But Ďurana believes
the quickest possible way to cut the deficit is to aggressively reduce the
level of government spending, adding that boosting the effectiveness of public
administration and reducing waste in redistributed public funds will have a
positive effect on economic growth in the mid term.
In addition to a
tighter belt in the area of wages for public administration employees and more
efficient procurement of goods and services, Ďurana sees space to reduce the
deficit by modifying currently mandatory transfers to individuals, firms or
other organisations that draw funds from the state budget.
“Beginning with cuts
in the bonuses going to construction saving schemes or child benefits up to
cutting the support for less active cultural organisations, the space is huge
and the amount of possible savings exceeds €1 billion,” Ďurana stated.
Mikloš said stronger economic growth will improve public
finances. The International Monetary Fund has projected that Slovakia’s economy
will grow by 4 percent this year in comparison to the 3.2 percent forecast last
offered by the Finance Ministry.
Other predictions include growth of 3.7 percent forecast by
the National Bank of Slovakia and 2.7 percent according to the most recent
forecast by the European Commission, SITA wrote.
Though Sadovská’s bank is keeping its estimate of GDP growth
at 3.1 percent, she said that the IMF’s 4-percent projection is not overly
exaggerated especially if demand from Slovakia’s main trading partners
continues to revive.
The
Slovak Spectator, 26 Jul 2010 Beata
Balogová
