Hello. Today, the Government passed
a package of budget documents for years 2024 and 2025.
Considering the worst natural disaster in our history,
our priority is financing the rebuilding after the floods.
The macro-economic situation is still uncertain
because of the situation in the world, high inflation
and especially because of catastrophic floods
that affected most of Slovenia.
According to the first assessments, we will need a couple of billions
for rebuilding and helping people and the economy.
We will need to allocate a significant amount of money to this
because we will need to focus on rebuilding.
Measures for rebuilding and help
will also be financed with funds from the RRF
and the EU Cohesion Policy for the 2021-2027 programmes.
In the revised budget for 2024,
we plan €14 billion of income and €16.2 billion of expenditures.
This means the deficit will be €2.2 billion,
which is 3.3% of the GDP.
If we did not consider the consequences of the floods,
the income would be half a billion lower
and the expenditures would be €1.1 billion lower.
This means the deficit would be €620 million lower,
which is one percentage point of the GDP.
In the budget for 2025, we plan €14.56 billion of income
and €15.8 billion of expenditures.
We plan the deficit of €1.26 billion,
which is 1% of the GDP.
The Government also drafted
the Act on the Implementation of the Budgets for the years 2024 and 2025.
In it, we defined the bonus for pensioners for 2024.
The law stipulates that in 2024,
the transfers will not be adjusted to the inflation.
The same applies to the joint income, tax reliefs
and income tax rates for 2024. The pensions will be adjusted
already in January 2024.
In the law, we also determined the amount of debt.
In 2024, the debt can be €4.66 billion,
and in 2025, it can be €4.35 billion.
We also defined the average fee for municipalities at €700.
If we reach an agreement with municipalities,
the Parliament will change it with an amendment.
It is time for questions. Who will be first?
Metka Majer, Pop TV.
We know the formula
is 4%. The ministries try to save money,
but the expenditures will be much higher.
What did you agree on?
I want to go two months back to July,
when the Government passed the budget.
If you look at that budget
and compare it with the expenditures in 2023,
you will see that we already reduced the spending,
and not only because in 2023, before the floods,
a big part of expenditures
was planned to compensate the cost of living crisis
because of high energy prices. We took the inflation into account
and we already then did a lot
with regard to the budget
and adjusted everything.
Then floods came, the biggest natural disaster in our history.
We assess the consequences for public finances
will be the same as in the time of Covid.
We appealed to all budget users
to find additional funding,
although some were not happy already in July.
We want to reduce the spending to help rebuilding after the floods.
This is our main priority.
We talked to the ministers behind closed doors.
These talks were not pleasant.
They all understand we need to reduce the spending,
but they all see this possibility elsewhere.
This is normal, therefore, the Ministry of Finance
sent them a memorandum and demanded from them
to lower the integral costs by 4%
and wages by 2%.
We coordinated it with the Ministry of Public Administration
that is negotiating with trade unions.
Responses were different.
Most of the ministries listened to our appeal
and some of them said they have huge problems
with this demand, therefore, the Government
held more meetings where these ministries told us
which measures should be taken, so they could reduce the spending.
The Government talked about it
and revised the proposed measures.
We approved some of them
and for others, we decided
not to support them. The measures are different
and were suggested by different ministries.
I will not list all of them, because it is less important
which measures were not approved,
but the ministers will tell you themselves, some already did.
One part of measures is meant for social security,
the other part of measures...
An important part are measures
for the field of science, research, development and economy.
We have deceided
that we won't cut the finances for science,
because in the long run these funds and a combination of other funds
for boosting the economy, start-ups and so on
are the most important ones
in the long run
to increase influxes with providing a higher added value.
Aleksander Kolednik. I would like to know, if it still as you've said.
Would you need to amend the budget next year?
What kind of reaction do you expect?
For a whole year we are reminding on fiscal rules.
They are undeniably back.
Whether an agreement within ECOFIN,
board of Ministers of Finance,
shall be adopted, is hard to say now.
In the last weeks these agreements are more intense
on a level of the European Commission.
I am an optimist and I believe that an agreement shall be made.
It is very important for us, Slovenia is actively taking part.
There are some solutions. Although the differences are in details,
but very important for us.
We have fiscal rules and they are written in the constitution,
so there is no doubt what the basic parameters are.
We followed those when preparing the budget
that we had approved in July.
Then the deficit in the percentage of GDP
in the budget for the year 2024 was 2.3 %.
And the deficit of the general government was 2.8 % of GDP.
Europe is being interesting in this number
and we have it written in our fiscal rules.
Even after the floods
we are maintaining the deficit
which originates from revenue and expenditure
that are not connected to the floods.
The truth is that expenditure is a lot higher because of the floods.
For almost 1.2 billion.
To some degree the revenue is also higher
for known reasons.
It is a fact that, as far as floods and expenditure are concerned,
we are planning in this budget... One moment, please.
335 millions of 1.2 billion.
Exactly 1.15 billion. It's already been divided to various departments.
To the departments, where we managed to define
to which projects they are referred to.
Here, the Ministry of Infrastructure was the most exact one.
It has made a list of tasks
and expenses connected with this
or revenue they will need to remedy the consequences of the flood.
Some Ministries haven't been able to list all the work yet.
We are planning a very big reserve on Ministry of Finance.
This reserve shall be during the year reassigned
to the items that we shall define until then.
We are talking also about
funds to remedy the consequences of the floods.
Additional revenue and expenditure
shall be presented transparently. Every Euro should be accounted for.
From this perspective
we have a very high reserve on Ministry of Finance.
Later we will precisely define what it was spent for.
We still believe we will have to amend the budget
in the beginning of the next year.
As far as budget planning is concerned, the problem is
a natural disaster that became a priority.
It happened in the beginning of August
and we are obliged to prepare the budget until end of September
and send it to the National Assembly with all corresponding documents.
The data are better every week,
but they still aren't completely accurate.
It would be much easier to plan the budget at the end of the year.
Then we wouldn't have to mend it.
We made an estimation from the data and what was adopted in July.
We added all the items that we now know about.
In the last days we have changed a few things about expenditure.
Until the end of the year we should know more.
A very important part of this is the Act we are preparing.
The Act of Remedy the Consequences and Development.
For recovery, yes. This Act shall in great measure
or completely define the measures
that will again reflect on revenue and expenditure.
A part of this shall be this Act
and the other part the calculations of cost in certain fields.
And of course, how many procedures
are possible or realistic to implement.
Go ahead. -Petra Sovdat of Finance.
In the days after the floods I have asked you,
if the government is planning to sell a state asset
to remedy the consequences of the floods,
which isn't unusual in the other states as well.
Your answer: it won't be necessary, because there is enough money.
Later you found quite a few additional charges.
A bank balance sheet tax that is not in the budget yet.
Probably it shall be, when the Act is adopted.
And an additional encroachment on already acquired rights,
which the Prime Minister spoke about yesterday.
Why was there at no point any consideration
of the sale of state property,
which amounts to more than 10 billion?
On the contrary,
additional nationalisations of companies are planned.
Especially in light of the fact that under this government
quite a few personnel moves were made,
which have a strange corporate background to say the least.
Let me give a very short answer.
We're talking about the budget, this is a completely different area.
I'll start with your statement
that you got an answer from me or from the ministry
that there is enough money and that this is not necessary.
You didn't get that answer.
You interpreted it your way.
I know what we answered.
The other thing...
We said several times
that we would first look for our own money.
But when you say that you will find your own reserves,
everyone has their own idea of what it means
to find these reserves. Even my colleagues in the Government
have their own ideas of what it means.
As I said before,
we have now done some important work in the last month.
It was also very tiring
in terms of finding these reserves. Of course it's not finished yet.
Like I said, we're legally bound by the Public Finances Act
to present the budget to the National Assembly
by the end of September.
I have already announced it will probably need amending.
This will not only contain a more precise definition
of how the funds will be spent,
it will also focus on the revenues.
You mentioned the tax on the balance sheet total of banks.
The budget cannot include
legal measures
that impact revenues or expenditures
or bills that haven't been passed yet.
When the bill is passed...
This will very likely be part of the renovation act.
Then we will also have the basis to amend the budget.
As far as the question regarding state-owned companies,
we haven't answered this question yet.
Some time ago we were thinking about issuing a strategy,
it will be put up for public hearing shortly.
Of course, the question of sale or non-sale of state companies
is a question of strategy,
and then the annual management plan of individual companies.
Another thing we're still working on,
I cannot share the details.
We're serious about finding our own funds first.
One possibility are dividends from state-owned companies.
But again, I wouldn't like to get ahead of myself.
Each company must be considered individually.
We don't want to threaten the future of these companies
with an extraordinary dividend payment.
But this is one of the likely sources.
We will know in the following months.
We're speaking about a couple of millions,
while the state is sitting on billions of assets.
I gave you my answer. -Go ahead.
Minister, a very concrete question.
Does this proposal foresee funds
for strengthening active civil rights
and empowering non-governmental organisations
in the field of active civil rights?
You will have to pose this question to the competent ministry.
As the Minister of Finance, I don't know the budgets
of individual departments in such detail.
A short subquestion. What is your view of that?
The Ministry of Finance is faced with a very demanding task
to find the reserves due to the floods that have affected us,
on the other hand, we see tenders worth ten million and more
for things that...
We don't really know what we're spending them on.
Like I said before, as the Minister of Finance,
in light of the event that took place,
I believe it is necessary to find reserves wherever possible.
But of course each of us sitting in this room
has a different view of where those reserves are.
Everyone we talk to...
Also from the municipalities,
where the negotiations are still ongoing.
A large part of the expenses from the state budget
in fact, probably the largest,
will go for the rehabilitation of the municipal infrastructure.
To the municipal budgets,
and then for the rehabilitation of this damage.
The municipalities keep saying that they understand,
but they think their flat rate should increase by 10 or 15%.
We all understand that costs must be cut,
just not ours.
The question about municipalities is still open,
but I have to say that,
even though these conversations were tiring and unpleasant,
I still have to say in the end
that as the Minister of Finance I am pleased.
Most of the departments have shown understanding,
even some of those that I personally did not expect them to.
But as I said, where exactly...
Apart from those things that I have already mentioned,
some are already known in advance, which the act will define,
but the competent ministers will explain the micro areas.
How do you view the accusations that Minister Ajanović Hovnik
is not distributing funds transparently?
First questions about the budget please.
Kaja, go ahead.
So not all ministries gave an average of four percent?
Did some give more?
How much will these austerity measures amount to?
It is relatively difficult to compare the numbers,
because pure austerity measures are one thing,
while measures required by different laws are another thing.
But of course we can change legal requirements with an amendment.
For example, there was quite a long debate
about what I've mentioned earlier,
the funds allocated to science.
This is a typical area, where I can say very clearly...
I believe Minister Papič will explain this in more detail.
In 2024 we will have by far the most funds
allocated to science in the history of Slovenia.
We not only spared no expense, we added to them.
That is why I say it is relatively hard to add and subtract.
The funds for science in themselves have nothing to do with the floods.
To give you at least a partial answer,
when we discussed these measures
and which ministries would have to interfere with certain rights
in order to achieve the expected reduction in expenditure,
I will just list the ministries we debated with the most,
and then you can talk to the ministers
about the measures that they will and will not implement.
Again, I will not speak for sure
about those who did not make the list,
but they are the Ministry of Labour, Ministry of Public Administration,
Ministry of the Environment, Ministry of Education,
MGTŠ, MZI, Higher Education and Natural Resources.
But those 600 million euros were raised?
The government never mentioned 600 million euros,
you added that up yourselves. It is actually quite complex.
By 600 million you probably mean the funds for 2024 and 2025,
that is what I gathered from what the media wrote.
The savings and reallocations have not been completed yet.
An area that we have not discussed yet are cohesion funds.
We have not yet opened the cohesion funds,
nor did we redistribute them as per the current priorities.
The government has found,
and I am sure you all know this very well,
that these measures interfere with many areas,
but the measures over the following two years
will be worth several hundred million euros.
How much? -Several hundred.
Our estimates were larger.
4% of the 2024 and 2025 budget amounts to more than a billion.
But since the main issue is what the ministries gave up,
it is September, 2024 is approaching
and the ministries had certain budgets,
could you list the five projects with the largest financial impact
that had their funding reduced?
As I said, other than the projects
for which the government discussed in the past few weeks
whether it makes sense to implement them,
the ministries did not discuss their individual projects.
For instance, I do not know which projects the Ministry of Defence
will not implement due to the decreased budget.
You will have to ask the Minister of Defence.
I did not mean the projects specifically.
Does the biggest impact come from the non-reconciliation of salaries
or perhaps the elimination of sick leave compensation?
Since you mentioned sick leave compensation,
the Ministry of Health
is already facing one of the biggest challenges.
It is one of the biggest budget spenders
for reasons that are already known.
The Ministry of Health faced a significant challenge
even before this additional 2% or 4% reduction,
so it is not all indirectly tied to the floods.
I will let them comment the measures they intend to implement.
But you manage the budget.
You made the breakdown and negotiated with them,
why should the ministries answer themselves,
as you are also involved?
As I said, it is largely the ministry's decision
which things are easier or harder to do
and which ones will have long-term negative effects.
Of course we all tried to not make reductions in those areas.
Jan Barlič. I just have a technical question
You mentioned the budget deficit due to the costs of recovery.
What will be the public financial deficit in 2024 and 2025,
since the recovery will take 5 to 10 years?
What are your expectations for the public financial deficit?
According to the budget that the government confirmed today
the state sector's deficit in 2024 will amount to 3,8%.
Without the floods
it would amount to 2,8% in both income and expenditure.
According to the applicable European rules
for natural disasters that exceed a certain percentage of the GDP,
which this natural disaster does,
for two years after the disaster you have the option
for expenses, as well as income,
but the deficit is affected mainly by expenditure,
which is significantly larger than the income,
to be counted as "one-off" expenses,
even in the case of floods.
This was also the case with the earthquake in Italy,
the floods in Germany, Greece ... It is the same everywhere.
These expenses inevitably count toward the deficit,
but part of this one-off expenditure and income
is counted separately, with an asterisk,
and is not counted in subsequent calculations.
Our deficit will stay as it is,
however, and this is tied to the agreements on new fiscal rules,
the Commission will not count this part in its calculations in 2024.
Of course, the European Commission thoroughly checks the expenses,
whether they truly are one-off expenses for flood recovery,
so that States do not include any unrelated expenses.
The European Commission expects us to implement certain reforms,
which are the condition for drawing from European funds.
Do the 2024 and 2025 budgets
foresee a fiscal, healthcare or pension reform?
Are there any concrete numbers? Will some incomes be lower?
Nothing in detail. For that to be the case,
the reforms should have been written already.
The reforms don't just have consequences for the budget,
but for individual budget items. The budget has to be carefully planned.
I wouldn't want to give any promises about reforms.
Despite the floods, healthcare is our priority.
Obviously, the floods have become the first priority of the Government,
we don't hide from that and we all agree on it.
That's why some unpopular measures will be confirmed in the future.
But healthcare is the Government's first priority.
Primarily because of the suboptimal service.
The issues are well-known.
On the other hand the financing of healthcare is far from effective.
This is a priority.
In the last few weeks the Ministry for health
has done a tremendous job.
It is only partially connected to the floods.
The things they have announced and put in practice are largely
connected to necessary changes in healthcare.
I wouldn't go further into detail.
I would just like to say: change is necessary.
You said you'll be saving several €100 million.
Can you comment on that?
I don't want to purposefully avoid talking about numbers.
The process is very complex.
When we're talking about the budget, we can exclude certain projects,
change a law or two
and discontinue covering for certain expenses from the budget.
In the last few weeks, the complexity of the situation has shown itself
during discussions on what really matters.
Like I said, it's not the only field.
If I compare it to the July budget cut,
some fields, and I've mentioned which before,
especially funding for development, science and developmental economy
will be several times higher.
That's why it's hard to talk numbers.
It also depends on the Ministries.
We need to know if the funds pertain to the flooded areas.
Yesterday, we received many questions about that.
How much will we inject into developing this area?
I can't say whether the area is in danger of flooding.
I believe my colleagues
will tell you what they've been working on.
We're not talking only about the cuts here.
I'd like to expand on that.
In light of this being the case in our neighbourhood,
and because there are warnings about decreased consumption,
have you considered relieving the pressure on workers?
Can we expect a fiscal reform regarding personal income tax?
I know you haven't been in favour of that and stopped it last year.
But times have changed.
We've said several times that the Government will deal with it.
I'll comment on that when I know more.
I can't comment on suggestions that we receive
from certain stakeholder groups.
It's a very complex field that will be dealt with.
I don't want to announce anything.
My answer will sound political, but it is not.
We'll be talking about concrete measures when it's time for that.
You'll understand what I meant by that.
If we forget about the floods, this Government has three priorities.
Healthcare, education and young people.
As I said, changes are coming.
An estimate is then 2024 or 2025?
I believe that the necessary changes
must happen next year.
Thank you.