www.fs-rs.si / News / News / Assessment of the Fiscal Consequences of the Coalition Agreement “The 15th Government of the Republic of Slovenia: The Work Programme of the 2022-2026 Coalition”
Published: 06/06/2022

Assessment of the Fiscal Consequences of the Coalition Agreement “The 15th Government of the Republic of Slovenia: The Work Programme of the 2022-2026 Coalition”

The Coalition Agreement “The 15th Government of the Republic of Slovenia: The Work Programme of the 2022-2026 Coalition” contains a set of broadly defined measures that go well beyond the four-year term of office. In terms of public finances, one of the key orientations of the Coalition Agreement is to gradually reach the EU-27 average share of revenue and expenditure. In addition to methodological questionability, such an orientation is also risky for a small and open economy, which is generally more exposed to financial markets.

The measures whose direction of impact on government aggregates can be established are aimed predominantly at increasing expenditure. The Fiscal Council reiterates its warning that the growth of current spending must not exceed the growth of long-term economic potential. At the same time, the Coalition Agreement also reflects to a considerable extent some orientations regarding the financing of additional expenditure, which is a difference compared to the two previously assessed coalition agreements. Funding is also expected to be provided by increased use of EU funds and partly by alternative sources of funding not yet specified in the Coalition Agreement, which would not necessarily lead to a deterioration of the fiscal position. Substantial implementation of the economic policies set out in the Coalition Agreement would represent a departure from the fiscal path presented in the unchanged policies scenario of the Stability Programme 2022, which indicated a gradual consolidation of public finances. A stalling of consolidation would increase the risk to the achievement of the medium-term fiscal balance in the coming years.

Several times, the Coalition Agreement also mentions commitments to ensuring (long-term) fiscal sustainability in relation to the measures it refers to. At the same time, the Coalition Agreement indicates some elements of solving the long-term challenges faced by Slovenia’s public finances, but again does not specify the measures in detail.

The Fiscal Council considers that the Coalition Agreement does not provide a sufficient basis for the planning of economic entities, due to its high degree of vagueness, in terms of both the scope and the timing of the measures. In this context, the Fiscal Council suggests moving towards the good practices of some countries where coalition agreements allow for a more accurate evaluation. This also gives the general public insight into their fiscal and macroeconomic implications.

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