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Press Release

29.01.15

The government approves the revised budget for 2015

At its regular session today, the Government approved the draft revised budget for 2015 and referred it to the National Assembly.

 


Macro-economic situation

 

In the budget for 2015, the revenue projections were based on macro-economic estimates from the Autumn Forecast of the Institute of Macroeconomic Analysis and Development (IMAD) from 2013. These estimates have changed significantly. When forecasting revenue for preparing the revised 2015 budget, we took into account previous realisation in 2014 and the updated macro-economic forecasts in IMAD’s Winter Forecast of Economic Trends, which predicts 2% growth in GDP in 2015. Economic recovery is still mainly fuelled by exports. This year, private consumption will also increase to a lesser extent and will follow growth in available income as the result of stabilisation in the labour market situation, which translates into movements in wages and employment. The absorption of EU funds is having a positive effect on growth, while also increasing general government expenditure.

 

 

In addition to macro-economic factors, the general government target trends were also affected by changed circumstances and factors affecting some major groups of revenues and expenditure. 

The main differences are due to: 

  • lack of income  from real estate tax, 
  • unplanned expenditure on interest rates for borrowing after implementing amendments to the 2015 budget, 
  • unduly low estimate of current transfers to the pension fund due to the passage of the new Act on the Slovenian Sovereign Holding in the spring of 2014, which introduced changes with regard to financing the regular expenditure of the pension fund by the Pension Fund Management company, 
  • different circumstances with regard to the absorption of EU funds. 

 


Budget targets for 2015 

 

Since 2012, Slovenia has actively implemented a policy of balancing public finances, both in terms of expenditure and revenue. In 2014, the general government deficit totalled 3.4% of GDP (5.3% including one-time events). Fiscal policy targets for 2015 consider the requirements and recommendations of the European Council and the commitments made in the 2014 Stability Programme and draft budgetary plan for 2015. The target deficit of the general government sector for 2015 is less than 3% of GDP.

 

Budget revenues

 

The proposed 2015 revised budget sets revenues at 8,562.1 million euros, which is 64 million euros less than in the curent budget for 2015. The greatest lack of revenue derives from the non-implementation of the Real Property Tax Act. The government has taken several measures to alleviate this: it has preserved the four brackets of income tax, raised the tax on financial services and insurance operations, raised the environment tax due to CO2 emissions and improved tax collection.

The revised budget foresees:

  • 6,870.2 million euros in revenue from taxes, 
  • 578.5 million euros in non-tax revenue, 
  • 40.7 million euros of capital income, donations and transferred revenue,
  • 1,072.6 million euros of funding from the EU budget.

 

 

Budget expenditure 

 

The draft 2015 budget sets expenditure at a total of 9,947.1 million euros, which is an increase of 461.8 million euros over the adopted budget (and 292.1 million euros more than was the realization in 2014). In terms of expenditure, the draft revised budget focuses on ensuring the implementation of legal commitment and 100% absorption of EU funds in the 2007-2013 period, which leads to higher expenditures and consequently to higher deficit in cash terms, but does not affect deficit in ESA terms. To make way for this, the government approved a set of measure at its session of 22 October 2014 which will contribute to lowering overall expenditure in other areas:

  • centralisation of public procurement and IT system and setting up an IT cloud, 
  • centralisation of state asset management, 
  • measure to reduce labour costs in the public sector, 
  • measures in the area of co-funding of municipalities, 
  • changes to the student work system, 
  • streamlining public services,
  • changing some subsidies into refundable funds,
  • sector-specific measures of individual ministries.

 

The breakdown of expenditure reveals that from the total of 9,947.1 million euros of expenditure, the use of EU funds totals 1,308.1 million euros and Slovenia’s participation stands at 229.8 million euros, which means that 15.5% of expenditure is connected to the absorption of EU funds, as 2015 is the last year when funds arising from rights recognised in 2007-2013 period must be used.

 

In terms of programme classification compared to last year's expenditure, many more funds have been allocated to intervention programmes and liabilities (+134%), protection of the environment and environment infrastructure (+67%), local authorities (+60%) and health care (+23%).

 

The draft 2015 revised budget is very investment-oriented, as the funds for purchase and construction have increased by 41% over last year, and investment transfers by 20%. Despite nominally higher debt than in the previous year, some 35 million less than in 2014 will be used to cover interest in 2015 due to the low interest rate environment. In accordance with the agreement with the trade unions, labour costs will also be nominally lower, as well as subsidies due to their replacement with refundable funds. The amount of funds for transfers to individuals and households is also lower, due not to a reduction in benefits, but the number of beneficiaries of parental compensation and unemployment benefits.

 

Budget deficit

 

The draft 2015 budget foresees that the general government deficit on a cash basis will total 1,385 million euros or 3.62% BDP. After recalculating to an accrual basis (particularly of a portion of EU funds which the Commission will withhold until receiving the final report on the efficiency of absorption of EU funds in the 2007-2013 period) and taking into account the expected balance of other government units, we expect the general government deficit in 2015 to be less than 3% of GDP according to ESA methodology.

 

 

 

 

 

The government issues opinion on the Act Amending the Marriage and Family Relations Act

 

The Government of the Republic of Slovenia has issued its opinion on the draft Act Amending the Marriage and Family Relations Act, which was submitted to the National Assembly by a group of deputies. The Government does not oppose the proposed amendments to the regulation of marriage and cohabitation.

 

A group of deputies has proposed that the definition of marriage be expanded to include a union of two people of the same gender. The act seeks to regulate the legal position of the cohabitation of two persons of the same gender that establish this relationship by an act of marriage in order to enable mutual rights and responsibilities. This is no longer defined as a same-sex union, but as marriage. In accordance with the extended definition of marriage as a union of two people not necessarily of different gender, the proposal also includes an equivalent definition of cohabitation. The group of deputies also proposes amendments to Article 21 of the Marriage and Family Relations Act, which prevents marriage between relatives in direct line of descent. The previous provision proposes the expiry of the validity of the Registration of a Same-Sex Civil Partnership Act and the conversion of same-sex partnerships into marriages or the dissolution of the partnership based on the statements of both partners. 

 

According to the government’s opinion on the draft act, the Slovenian Constitution does not allow for the different treatment of same-sex unions; on the contrary, when writing the Constitution, the authors were aware of this significant fact and recognised sexual orientation as a matter of personal circumstance, whereby the state should not allow discrimination, as everyone should be guaranteed the same freedom, and should even strive to guarantee equality (second paragraph of Article 14 of the Constitution of the Republic of Slovenia). 

 

Since 2003, the decisions of the Constitutional Court have moved the law increasingly towards the fully equal status of same-sex unions, marriage and cohabitation.

 

Considering all the findings of the Constitutional Court, i.e. that these are essentially the same real and legal forms of union (registered same-sex partnerships) and that a legal differentiation of both unions, including their legal consequences, is not based on actual objective circumstance but on sexual orientation, the government does not oppose the proposed changes. 

 

The government adds that in accordance with the prepared normative working programme of the government for 2015, it has also been preparing amendments to same-sex partnership legislation, and has already engaged in public discussion of this issue.

 

 

 

 

 

Slovenia to send humanitarian supplies to Ukraine

 

The Slovenian Government decided to send 500 sleeping bags and 200 blankets from the protection and rescue reserve fund as humanitarian supply relief based on Ukraine's request for material aid due to internal conflicts. The estimated value of the aid including transport is 43,000 euros. 

 

The government authorised the Administration of the Republic of Slovenia for Civil Protection and Disaster Relief at the Ministry of Defence to implement the decision.

 

Due to the increased numbers of people affected by the conflict and internally displaced persons, and in view of the coming winter, in November 2014 Ukraine again asked for assistance in the form of supplies, such as sleeping bags, tents and generators, in order to ensure temporary accommodation and basic living conditions. 

 

In accordance with the decisions of the European Council of 18 December 20144, the EU Humanitarian Aid and Civil Protection department asked members of the EU Civil Protection Mechanism to respond to Ukraine's request. 


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