www.fs-rs.si / News / News / Monthly Information, January 2023
Published: 01/06/2023

Monthly Information, January 2023

According to provisional data, the state budget deficit amounted to EUR 1,394 million in 2022, which is significantly less than in 2021 (EUR 3,080 million), mainly due to lower COVID-related expenditure. In accordance with the Fiscal Council’s expectations, the deficit in 2022 was significantly lower than predicted in the revised budget. Upon the adoption of the latter, we estimated that expenditure could be lower by around EUR 500 million; it was actually lower by EUR 646 million. This confirms our assessment that inadequate budgetary planning continues, which also creates considerable manoeuvring room for unjustified spending in the previous and the current year.

Excluding the direct impact of COVID-related expenditure and measures to ease the cost of living crisis, the state budget was practically balanced in 2022 (a deficit of EUR 60 million). The budget adopted for 2023 foresees a considerable deterioration. The core balance is expected to amount to approximately EUR -1.5 billion, which is similar to 2020, although revenues are projected to be higher by around EUR 4.4 billion over the same period.

The expenditure for COVID-related measures amounted to EUR 864 million in 2022 and to a total of EUR 5,656 million since the beginning of the epidemic. A significant part of last year’s expenditure was on healthcare labour costs (EUR 144 million) which are largely not directly related to the epidemic and will continue to burden the state budget.

The impact of measures to ease the cost of living crisis on the state budget amounted to EUR 470 million in 2022, while all measures amounted to a total of EUR 740 million. With the adoption of further legislation in December, the estimated impact of which exceeds the relatively large reserve earmarked for this purpose in the 2023 budget, the measures taken to date to ease the cost of living crisis on the state budget are expected to amount to approximately EUR 1.6 billion this year.

The actual implementation in 2022 and the adopted budget for 2023 indicate that the growth of state budget expenditure excluding the direct impact of COVID-related expenditure and measures to ease the cost of living crisis is expected to be 18.5% this year. This would be about twice the average of the previous two years and the highest growth rate ever. The funds planned for social transfers and intermediate consumption, which according to the Fiscal Council’s assessment were actually underestimated at the time of adoption of the 2022 revised budget, are in our opinion insufficient to cover this year’s commitments. Given that the medium-term fiscal framework should play a central role in the proposed revised EU economic governance framework, significantly more efforts will be required to improve the credibility of budgetary planning.

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