Hello. During its 58th meeting, the government defined
the breakdown of budgetary expenditures
for the draft of changes to the 2024 national budget
and the draft of the 2025 national budget.
The government also approved changes to the Recovery and Resilience Plan.
To present both of these topics in detail,
here's Finance Minister Klemen Boštjančič.
Thank you.
Hello.
The government is preparing budgetary documents
for 2024 and 2025.
Today, we approved a breakdown of expenditures
by ministries or budget users.
In 2024, the overall expenditures will amount to
just more than €15.2 billion, while in 2025,
they will amount to €15.9 billion.
This way, the government is fulfilling three key priorities,
to which is has committed itself in its coalition contract.
This is, first of all, universal healthcare,
which includes care for the aged through the Long-Term Care Act.
Second, there's knowledge, not just the knowledge
that is covered by education, but also digitalization
and support for companies that create high-value jobs.
The third priority is young people
and associated policies. This includes housing,
free lunches, and so forth.
The government is also following fiscal rules,
which will again come into effect next year.
When preparing changes to the national budget for 2024
and the national budget for 2025,
the Finance Ministry considered the latest macroeconomic forecasts
prepared by Institute of Macroeconomic Analysis
and Development as part of its spring report,
all the obligations of the state, and the fiscal rules.
In 2024, the expenditures will be some €300 million lower
than had been planned in the national budget for 2024,
which was approved by the National Assembly in November 2022.
This reduction is a part of the effort to reduce
the public finance deficit to a level below the reference value
of three percent of the GDP in 2024
and the continued gradual reduction of the deficit
over the next few years, as required by the diligent
management of public finances.
Despite the gentle decrease in expenditures for 2024,
compared to the approved budget,
the expenditures will remain on a very high level
because they'll be about 10% higher than the realized
amount in 2022 or about 50% higher
compared to the pre-Covid level from 2019.
Such a level allows us to address key development challenges
and priorities in the years to come.
It also ensures the rational use of public funds.
In the case of investment projects,
the use of EU cohesion funds and funds from the Recovery
and Resilience Mechanism will be the key.
By August 22, the ministries will prepare proposals
of their financial plans,
while the government will approve the budget documents
and send them on to the National Assembly by the end of September.
The final estimate of budgetary revenue will be known then,
as will the planned deficit, because in September,
IMAD will publish its fall macroeconomic forecast.
The government is preparing its budgetary documents
with an awareness that, in the years ahead,
we'll once again need to manage budget funds wisely.
As I have been mentioning for some time, the funding
of all wishes in neither financially sustainable
nor to the benefit of our country and its citizens.
The second topic today was the Recovery and Resilience Plan.
The government approved a change to the plan today.
By the end of the week, the Office for Recovery and Resilience
will send the proposal, with all the documentation,
to Brussels for its formal coordination and confirmation.
The final confirmation by European institutions
is expected in the fall.
The government has decided to change the proposal
because of changed circumstances that affect the realization
of the plan. This refers primarily to a reduction in direct grants
from the Recovery and Resilience Mechanism
because of greater development in 2020 and 2021,
as well as inflation and additional funds
for the realization of the REPower EU plan.
With the proposed change, the government
is not interfering with the basic concept of the plan.
Instead, it's addressing newly emerged circumstances
that are preventing the execution of reforms and investments
as was foreseen when the plan was adopted in August 2021.
As part of a new chapter in the REPower EU plan,
for which Slovenia has an additional €122 million in funds available,
we'll carry out two additional reform measures
and four investments. As part of this framework,
we're planning the realization of the Act on the Promotion
of Devices for the Use of Renewable Energy Sources
and the Act on Infrastructure for Alternative Fuels
and the Promotion of the Transition to Alternative Fuels in Transport.
We're also planning investments to revamp remote systems
with new, renewable technologies, the efficient use of energy,
and the decarbonization of the economy.
There will also be investments into the electric power
distribution network and infrastructure
for alternative energy in transport.
In the process of responding to a decline in direct grants,
the government has made an effort to retain investment
that would follow the very condensed planned timeline.
Only this way can we make successful use
of EU Recovery and Resilience funds.
One of the key criteria used by the government
to identify investments was time-based risk.
All the investment as a part of the plan
must be completed by mid-2026, when the state is required
to provide the European Commission with the final claim
from the Recovery and Resilience Mechanism.
The key differences between the original and the final proposal
in terms of the cut in direct grants are the following:
After receiving assurances from the University of Ljubljana,
or rather its Medical Faculty, that the Vrazov Square Campus
is proceeding according to the planned timeline
and can be carried out within the deadline,
the government decided to keep it in the plan.
We recommend to the European Commission
that to realize the investment, it should provide funding
in the amount of €40 million in direct grants,
while we will provide the remaining €12 million
from domestic sources.
When the investment was confirmed, a part of the plan
called for the building of a new clinic for infectious diseases
in Maribor. The timeline for that project has been pushed back,
and there's a substantial risk regarding its execution by mid-2026.
Failing to meet the deadline of the investment
could jeopardize the availability of EU Recovery and Resilience funds.
After repeated deliberation,
warnings from the Commission regarding this project,
and estimates of the time-based risk of the investment,
the government decided to carry out the project
using domestic funds and its own, more realistic timeline.
The project will therefore be excluded from the RRP.
The final key change is the adjustment of the financial
construction to carry out investments
to reduce the risk of flooding and other climate-related disasters.
This is one of our projects intended to combat flooding.
In the original plan, the government planned to reduce direct funding
by €10 million to €20 million.
Based on subsequent information, the government estimates
that the planned projects for flood prevention,
which were planned to be financed through the loan portion
of the Recovery and Resilience Mechanism,
aren't being carried out according to the timeline.
Because these are complex projects, in terms of both preparation
and execution, the government will recommend to the European
Commission that €120 million of direct grants be set aside
for this project, and not €280 million as originally planned.
The projects that won't be a part of the plan
will be realised with our own funds and on our timeline.
After we have taken into account the new facts,
we predict to spend €2.16 billion to realise the plan,
€1.49 billion of grants
and €545 million of non-grants.
We will also allocate €122 million of grants
for REPowerEU measures. We want to prepare and coordinate reforms
and get payments from the EU Commission faster
which is why we suggest to move some goals
from the first payments to the later ones. This delay
doesn't mean we will lose funds, but the delay can affect
how we apply for them.
This can cause trouble
with financing the already finished projects.
If we don't get the money as planned,
we will have to provide the funds from an integral source.
We provided the legal basis for it.
Independently from getting the money from Brussels,
we are moving forward with projects without delay.
The projects are being realised. Some have even been finished,
for instance renovating the Ljubljana-Jesenice railway,
the railway station in Grosuplje and apartments in Maribor.
We are also building a new Veterinary Faculty.
Thank you. There isn't anyone online, but journalists are here.
Pop TV. Come in front of the microphone.
Yes. Hello. Anže Božič, Pop TV. I want to know about the budget.
You said you are returning to a stricter fiscal policy.
Which ministry had to renounce the most funds
and which got the most? Could you be more specific about the projects?
Which are five biggest projects that were removed from the plan?
We have similar talks about the budget every year
with different parties.
They are never completely satisfied with how we allocate the money.
We said a couple of times
that next year, the fiscal rules will apply again.
During past three years, we had two crises
in Slovenia as well as in Europe and we got used
to having unlimited funds.
This has never been the case, but in 2024 and 2025,
we have to prepare a budget
that will be sustainable. We did it.
I don't want to expose any ministries
because there are no winners and losers.
If you want, they are all
dissatisfied on one hand,
but on the other hand, they understand the situation.
We talked about it at government meetings
and separately with every ministry.
We were very concrete and reached an agreement in the end
and unanimously confirmed the budget for 2024 and 2025.
The other question was about the projects.
We talked a lot about the projects in RRF.
We were discussing them for quite some time.
The projects we talked about the most
are the ones I mentioned. Will we build a new Faculty of Medicine?
With regard to the timeline,
we very intently looked for those projects
that are least likely to be completed by 2026.
Within this context, we implented a significant change.
The Faculty of Medicine project will be reincluded in the RRP,
while the Clinic for Infectious Diseases in Maribor
will be excluded.
Of course, this does not mean that the government
will not allocate funds for the Clinic. On the contrary.
However, both the government and the European Commission
believe that this project is so far from being realised,
that doubts about it being completed on time
are even greater than with the Faculty of Medicine.
That is why we adopted this change in recent weeks.
By the way, the Faculty of Medicine has explicitly guaranteed
that the project will be concluded by 2026.
Another broad set of projects
that will not be financed from the RRP funds
are flood-protection projects.
Within this context, I daresay that
during the preparation of the RRP
there was a lot of excessive optimism.
Certain local communities and municipalities
were called upon to propose projects.
Now, or even a while ago, it became clear
that a number of these projects cannot be realised by 2026
for similar reasons as other infrastructure projects.
We also concretely addressed this in this RRP.
Minister Brežan will expand on this
at his press conference on Wednesday.
The Ministry of Education
will also have one on the topic of the Faculty of Medicine.
Go ahead. -Another question regarding the budget.
I know that it is not a competition, but these are facts and numbers,
so, please, if you could be a little more specific,
which ministries stand to lose and gain the most?
As I said before, no ministry loses or gains the most,
as the question is also compared to which budget?
The budget of 2022, a very specific year
because of the energy crisis and a number of Covid measures
that are still being carried out.
As I stated earlier,
the government has been following three key priorities,
which are healthcare, young people and knowledge.
These three priorities are also reflected in the budget.
Of course, when I say healthcare,
I do not only mean the budget of the Ministry of Health.
One part of the healthcare reserve
is being planned by the Ministry of Finance,
namely 330 million euros worth of measures,
part of which are already known.
Then there is long-term care,
a much debated topic in recent weeks
that we also associate with healthcare.
It focuses mainly on care for the elderly,
but it belongs in the same aforementioned set of priorities.
There has also been much debate
around young people and the housing policy
and that we urgently need to accelerate
the building of non-profit rental apartments.
Regarding this, by the way, financing,
meaning the recapitalisation of the Housing Fund,
will be secured from the B account,
so it is not part of the budget expenditure breakdown.
We will allocate funds in line with the state of the projects.
I hope that in the coming weeks and months
the competent ministry and the Housing Fund
will succeed in bringing the projects far enough
for us to actually allocate the funds.
Of course, the Ministry of Finance cannot secure funds
if the projects' timelines and costs are not adequately defined.
Thank you. Any other questions?
No? Then we are done. Thank you, Minister,
and thank you all for coming. Have a nice day. -Thank you.