Press Release

The Government assesses the third package of anti-crisis measures 'Fighting the crisis is fighting for new jobs'

At today's session the Government approved the material assessing the third package of anti-crisis measures aimed at improving the economic and social situation in Slovenia 'Fighting the crisis is fighting for new jobs', which was submitted to the National Assembly by a group of MPs, with Jože Tanko as the first signatory. The Government will forward the material to the National Assembly.

Most of proposed measures indicate only the direction that economic policies should take, and therefore implementation is a matter of interpretation, which could have very different effects on public finances. Sometimes it is not clear where the measures are short-term and where they present structural reforms. It is not clear which measures are aimed at alleviating the aftermath of the crisis or paving the way for an easier exit, and which may sometimes be appropriate, but are not a priority in a time of crisis, or their implementation is questionable. The introduction of some measures would not contribute to fighting the crisis, which should be their purpose, but would make the budgetary situation even more dire in the short term. This applies particularly to the fiscal measures, where income from taxes would fall, and to numerous other measures which would raise expenditure. The proposed measures reduce budgetary income and mostly increase expenditure, and are therefore contrary to the proposed goal of reducing public expenditure and government debt.

From this point of view, the proposal is flawed, as it does not asses the effects of individual measures on the budget. Many proposed measures in the chapter on the Taxation System are acceptable in principle, or appropriate, as they would lead to reducing the tax burden of companies. However, this would mean significant loss of income. The material does not disclose how this loss would be compensated for (there are few concrete suggestions, such as reducing the salary fund in the public sector by 2 per cent a year). From the point of view of sustainable public finances, the proposing group should clearly define (in euros) what financial consequences the package would have. Therefore, additional analyses should be carried out in several cases, which would enable a prudent decision about their adoption. In the present difficult financial situation, no measures which increase public expenditure can be implemented; therefore, we should select priorities with regard to efficiency and set goals.

According to the approved documentation (budget, draft financial plans of the Institute of Pension and Invalidity Insurance and the Health Insurance Institute of Slovenia), the government deficit would total about 5.4 per cent of GDP in 2010, and 4.5 per cent in 2011. If we consider all the proposed measures aimed at alleviating the tax burden which were proposed by the SDS party, general government revenue would fall by at least 1,590 million euros. The total effect would result in the government deficit reaching at least 7.5 per cent of GDP in 2010, which is 2.8 per cent over the one calculated on the basis of the approved documents. It should also be noted that such a deficit would only be reached if all expenditure fell to the point proposed by the SDS, although they have not disclosed any concrete steps to reach it. There is only one measure aimed at lowering expediture; all the others have the opposite effect. Threfore, we assess that the projected deficit is not realistic. If expenditure does decrease, the government decificit will reach as much as 9.8 per cent of GDP in 2010 and 8.9 per cent in 2011.

The Government also agreed on a reply to the expert opinions which the Constitutional Court has obtained in the process of deciding if the Arbitration Agreement between the Governments of Slovenia and Croatia complies with Slovenia's Constitution. In the reply, the Government adopts a position on some expert legal opinions, refuting claims that the agreement does not comply with Slovenia's Constitution and the Basic Constitutional Charter on the Sovereignty and Independence of the Republic of Slovenia.