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Published: 12/05/2022

Monthly Information, December 2022

According to provisional data, the state budget deficit amounted to EUR 562 million in the first eleven months of 2022; without the direct impact of measures to mitigate the effects of the epidemic and inflation, the state budget would have had a surplus of EUR 298 million. The total deficit was almost EUR 2 billion less than in the same period last year, which is practically entirely the result of a smaller COVID-related expenditure. In accordance with the Fiscal Council’s expectations, the deficit will be significantly lower in the whole year than forecast by the revised budget (EUR 2,040 million).

Revenue excluding the direct impact of epidemic and inflation mitigation measures was 16.0% higher on a year-on-year basis in the first eleven months of 2022. The high growth is partly due to a base effect, as revenue was rather low in the first months last year due to restrictive measures and partly due to the rapid recovery of domestic demand, while higher inflation also contributed significantly to growth. At the same time, revenue from EU funds in particular has been lower than planned in the revised budget.

Expenditure excluding the direct impact of epidemic and inflation mitigation measures was 10.0% higher on a year-on-year basis in the first eleven months of 2022. A comparison between the actual budget outturn and the adopted revised budget shows that “core” expenditure (excluding that related to COVID and inflation) would total around EUR 2.3 billion in December, which is approximately EUR 1.3 billion more than the average for the first eleven months of this year. This is a continuation of the practice of taking advantage of the extraordinary circumstances, when unduly large manoeuvring spending room is created when preparing budget documents.

The total level of state budget expenditure for COVID-related measures from March 2020 to the end of September 2022 amounted to EUR 5,509 million, of which EUR 716 million in the first eleven months of 2022. The revised budget shows that a further EUR 371 million remains available for this purpose by the end of the year.

The direct financial impact of the measures taken thus far to mitigate the impact of price increases on the state budget this year is estimated at around EUR 430 million. Based on the adopted measures, another EUR 100 million should be realised in December this year. The Government announced a new package of measures for 2023 with an estimated amount of EUR 1.2 billion. If this estimate is realistic, then the entire reserve created for this purpose in the budget for next year would be used, which would limit the scope for adopting any additional measures.

A comparison of the outturn so far and the recently adopted revised state budget for 2022 indicates that a deficit of EUR 1,478 million is expected in the last month of this year, of which EUR 1,008 million is unrelated to measures to mitigate the effects of the epidemic and inflation. The budget outturn until November inclusive further confirms the Fiscal Council’s opinion that the adopted revised budget is unrealistic.

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