Not an extra euro. The new government will receive a ceiling on spending from the old

The government should definitively make a commitment not to spend more this year than set out in the general government budget approved by parliament.

Voting is also on the agenda of Wednesday’s cabinet meeting on the proposal for a correction mechanism for 2020, which the Ministry of Finance still has at the end of last year prepared on the basis of deteriorating management in 2018. The correction mechanism is therefore intended to return Slovak public finances back on the path to a balanced budget.

The Ministry of Finance proposed in the correction mechanism for next year limit public spending so as to achieve a structural deficit of 0.49% of gross domestic product. That is, public spending reports will not be able to exceed € 39.326 billion in 2020. It is response to a significant deviation from the path towards a balanced budget, which the Ministry of Finance stated for the first time in the evaluation of performance rules for 2018. The Ministry therefore proposed to launch a corrective mechanism, which is the limit on public spending.

The budget will be binding

The expenditure limit is based on the approved public administration budget for the year 2020. “This means that public administrations will not be able to spend more, than they have approved in the budget. In addition, the Ministry of Finance will publish in May and August of this year, monitoring of compliance with the expenditure ceiling, “ states the ministry.

According to the resolution on the proposal, the government approved the correction mechanism imposed by the Minister, the Chairman of the other central state administration bodies and administrators of other chapters of the state budget the total volume of expenditure of their chapter for 2020. Other public entities the report shall recommend that measures be taken to ensure compliance with the overall expenditure according to the ESA 2010 methodology approved for 2020.

Municipalities are questionable

However, it remains questionable how the government can comply with spending limits ensure, for example, in the local government, which about its finances decides independently. The government itself has a direct impact only on expenditures state budget. Their height is less than half budgeted expenditure of the whole heading of general government, including mentioned self-governments.

The Council for Budget Responsibility (CBR) in its assessment of the proposal correction mechanism, she stated that the design of the material from the workshop Ministry of Finance formally meets all the provisions of the law on budgetary rules. At the same time she stated that compliance budgeted revenue for 2020 while achieving the planned deficit of 0.49% of gross domestic product would return Slovakia to trajectory towards a balanced budget. However, the Council also notes that the proposed correction mechanism may not ensure a long-term sustainability of compliance with budgetary rules, for the planned pace expenditure growth.

The risks are in what needs to be paid

According to the Budget Council, the risks that identified next year’s budget worth 1.29 billion euros. According to her, achieving the budgeted goal will thus require additional fiscal measures. According to the advice, a significant part of the risks results from expenditure linked to existing legislation, such as social benefits and transfers, resp. are in areas outside direct control government, for example in local government.

To ensure compliance with the set spending limit, the Budget Council therefore recommends that the government move again in the short term assessment of the expenditure structure of the approved budget. It would be appropriate according to the council, information on local government expenditures was available on a regular monthly basis similar to that available for other public administration entities.

The government should definitively make a commitment not to spend more this year than set out in the general government budget approved by parliament.

Voting is also on the agenda of Wednesday’s cabinet meeting on the proposal for a correction mechanism for 2020, which the Ministry of Finance still has at the end of last year prepared on the basis of deteriorating management in 2018. The correction mechanism is therefore intended to return Slovak public finances back on the path to a balanced budget.

The Ministry of Finance proposed in the correction mechanism for next year limit public spending so as to achieve a structural deficit of 0.49% of gross domestic product. That is, public spending reports will not be able to exceed € 39.326 billion in 2020. It is response to a significant deviation from the path towards a balanced budget, which the Ministry of Finance stated for the first time in the evaluation of performance rules for 2018. The Ministry therefore proposed to launch a corrective mechanism, which is the limit on public spending.

The budget will be binding

The expenditure limit is based on the approved public administration budget for the year 2020. “This means that public administrations will not be able to spend more, than they have approved in the budget. In addition, the Ministry of Finance will publish in May and August of this year, monitoring of compliance with the expenditure ceiling, “ states the ministry.

According to the resolution on the proposal, the government approved the correction mechanism imposed by the Minister, the Chairman of the other central state administration bodies and administrators of other chapters of the state budget the total volume of expenditure of their chapter for 2020. Other public entities the report shall recommend that measures be taken to ensure compliance with the overall expenditure according to the ESA 2010 methodology approved for 2020.

Municipalities are questionable

However, it remains questionable how the government can comply with spending limits ensure, for example, in the local government, which about its finances decides independently. The government itself has a direct impact only on expenditures state budget. Their height is less than half budgeted expenditure of the whole heading of general government, including mentioned self-governments.

The Council for Budget Responsibility (CBR) in its assessment of the proposal correction mechanism, she stated that the design of the material from the workshop Ministry of Finance formally meets all the provisions of the law on budgetary rules. At the same time she stated that compliance budgeted revenue for 2020 while achieving the planned deficit of 0.49% of gross domestic product would return Slovakia to trajectory towards a balanced budget. However, the Council also notes that the proposed correction mechanism may not ensure a long-term sustainability of compliance with budgetary rules, for the planned pace expenditure growth.

The risks are in what needs to be paid

According to the Budget Council, the risks that identified next year’s budget worth 1.29 billion euros. According to her, achieving the budgeted goal will thus require additional fiscal measures. According to the advice, a significant part of the risks results from expenditure linked to existing legislation, such as social benefits and transfers, resp. are in areas outside direct control government, for example in local government.

To ensure compliance with the set spending limit, the Budget Council therefore recommends that the government move again in the short term assessment of the expenditure structure of the approved budget. It would be appropriate according to the council, information on local government expenditures was available on a regular monthly basis similar to that available for other public administration entities.