Page 150 - SE Outlook Regions 2023

4.11 Budget and debt - Slovenia

In November, Slovenia’s parliament adopted the state budgets for the
next two years, setting budget deficits of 5.3% of GDP in 2023 and 3%
of GDP in 2024.

The state budgets for 2023 and 2024 reflect the current situation with
the war in Ukraine and are intended to mitigate the consequences of
the price increases for households and the economy.

Spending in 2023 will be the highest ever at €16.7bn, and will decline
slightly in 2024 with high allocation of funds for measures to mitigate
the energy crisis.

However, Slovenia’s Fiscal Council warned against "unrealistic
planning" in the state budget for 2023 and 2024 and pointed out the
budget risks.

According to the Fiscal Council, the key shortcomings of the state
budgets for the next two years are the inadequate basis due to the
unrealistic budget revision for 2022, unrealistically high planning of
investments and the underestimation of the expenditures growth for
2024.

According to the Organisation for Economic Co-operation and
Development (OECD), faster fiscal consolidation is needed to reduce
demand pressures. Support should be financed by cuts to other
recurrent spending and be better targeted. This entails replacing energy
price caps with temporary direct subsidies for low-income households
that preserve energy saving incentives.

The OECD said the government responded to the energy crisis with a
fiscal package of 0.6% of GDP in 2022 and announced further
spending of 2% of GDP for 2023. This includes direct subsidies to
households and businesses and temporary tax cuts. The government
also capped the price of electricity and gas in September for one year
for households and small businesses. Temporary measures are
assumed to be phased out in 2023. These measures are expected to
increase the budget deficit to 5% of GDP in 2023, before the fiscal
stance is tightened in 2024.

General government gross debt is seen at 98% of GDP in 2023 up from
95.4%/GDP in 2022, according to OECD.

150 SE Outlook 2023 www.intellinews.com