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Published: 11/07/2022

Monthly Information, November 2022

According to provisional data, the state budget deficit amounted to EUR -283 million in the first ten 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 465 million.

Revenue excluding the direct impact of epidemic and inflation mitigation measures was 18.2% higher on a year-on-year basis in the first ten months of 2022. The adopted revised state budget for 2022 therefore implies that the growth of this “core” revenue is expected to slow to 10.2% in the last two months of this year.

Expenditure excluding the direct impact of epidemic and inflation mitigation measures was 10.2% higher on a year-on-year basis in the first ten months of 2022. The adopted revised budget therefore implies that the growth of the “core” expenditure is expected to strengthen to 34.4% in the last two months of this year. This would mean that the “core” expenditure in the last two months of the year would average around EUR 1.7 billion per month, which is around EUR 0.8 billion more than on average in the first ten months.

The total level of state budget expenditure for COVID-19-related measures from March 2020 to the end of October 2022 amounted to EUR 5,465 million, EUR 672 million of that in the first ten months of 2022. According to the revised budget, COVID-19-related measures are expected to cost less than EUR 1.1 billion for the whole year, which means that another EUR 415 million would be spent by the end of the year.

The direct financial impact of the measures taken so far to mitigate the impact of the price increases on the state budget this year is estimated at EUR 440 million. The expected outturn in the last two months of the year is just under EUR 200 million. The total direct impact of all the inflation measures so far this year is estimated at around EUR 760 million.

The outturn so far and the adopted revised state budget for 2022 indicates that a deficit of EUR -1,757 million is expected in the last two months of the year, of which EUR -1,157 million is unrelated to measures to mitigate the effects of the epidemic and inflation. Against a backdrop of significant increases in investment, current transfers to social security funds and labour costs, transfers to individuals and households and expenditure on goods and services are even expected to drop year-on-year in the last two months of the year. The outturn up to and including October thus confirms the Fiscal Council’s assessment that the revised budget did not provide an adequate basis for the preparation of the 2023 and 2024 budget documents. Moreover, the creation of wide room for manoeuvre for expenditure also seemingly reduces the impact of measures taken after the entry into force of the revised budget on the fiscal outturn.

The draft Act on Healthcare Emergency Measures to Contain the Spread of the COVID-19 Communicable Disease and Mitigate its Consequences in the Health Sector continues the adoption of intervention legislation not necessarily directly linked to the situation it addresses. This suggests the risk that intervention legislation to mitigate the effects of inflation will also contain provisions that are not directly related to the energy crisis. The large budget reserve in the draft budget for 2023 for inflation measures would thus be used appropriately only formally, but in reality, as during the epidemic, the funds would be used to tackle other problems, including those of a systemic nature, which could put a lasting strain on public finances.

© Fiscal Council 2017 - 2022

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