In the first half of the year, the state budget deficit, excluding intervention measures, was EUR 800 million, i.e. EUR 750 million more than in the same period last year. This deficit increase had been envisaged by the current budget. The deficit for the entire 2025 had been projected at EUR 1.700 million, whereas last year, it stood at around EUR 200 million.
Compared to the same period of the last year, slower revenue dynamics was a result of slower economic activity, which, at least for the time being, fell short of the projected one. The increase in spending remained relatively high and broad-based. As expected, it was mainly due to higher labour costs in light of the change in the wage system.
On the revenue side, the deviation of the realisation of spending from the current budget was mainly due to lower receipts from EU funds, which was on the expenditure side reflected primarily ina the lagging behind of investment spending.
The drafting of the budgets for the next two years, which is due to be made this autumn, should:
– be based on precautionary tax revenue planning and projecting realistic EU funding level due to the many uncertainties regarding macroeconomics trends;
– prevent overestimating expenditure, which, among other things, may result in ineffective expenditure, particularly in investment which should be planned in a reliable and medium-term oriented manner;
– address long-term fiscal risks and avoid increasing them. Adopting the pension reform would significantly mitigate those risks. Key decision-makers should abstain from adopting measures that appeal to voters during pre-election period, but have a negative medium-term fiscal impact. An additional key risk is envisaged in the increase in defence spending. This is why it is important to clearly define the purpose and the scope of this additional spending, and adopt measures to prevent a worsening of fiscal sustainability;
– maintain confidence of financial markets, since the margin on Slovenian Government bonds has been at its lowest rate in the past three years, while the country’s credit ratings have been among the highest in the region of Central and East Europe;
– ensure a general government debt reduction to achieve public finance sustainability.