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Prime Minister Janez Janša: The budgetary documents for the next two years are optimistic, developmental, socially and sustainability-oriented and forward-looking

On Monday, 5 October 2020, at 14:00, Prime Minister Janez Janša attended the 45th extraordinary session of the National Assembly where he presented the 2021–2022 Budget Memorandum, the Draft Amending Budget for 2021 and the Draft Budget for 2022.

The transcript, which has not yet been authorised, is provided below.

Dear Mister President, thank you for giving me the opportunity to speak. Esteemed High Assembly. Not so long ago, we were explaining this year’s revised budget on this very podium in this National Assembly, referring to the crisis situation that we experienced in the spring and which still partially continues. This time, we are looking at budgetary documents for the next two years that are significantly more optimistic.

The Minister of Finance will later speak about certain numbers in more detail. In my introduction, I will only try to present the framework of the Budget Memorandum, which reflects on the one hand our capability or our resilience to overcome the situation in which we found ourselves this year due to the epidemic so that we are now growing again, and on the other hand, that we are trying to take advantage of certain opportunities that arose while resolving the epidemic and which can be denoted by the phrase European funds. In the coming years, the Republic of Slovenia will be able to take advantage of the largest amount of such funds ever available and therefore fix many things with these funds or fill gaps that opened up this year, while also healing some old investment wounds.

As you have learned in more detail when discussing the revised budget, domestic and foreign institutions forecast a decline in gross domestic product for this year; by 6.7 per cent according to the latest data. Significant growth of over 5 per cent is projected for the next year and more than 3 per cent in 2022, which means that if this is realised it is possible that Slovenia’s gross domestic product will exceed EUR 50 billion in 2022 for the first time in its history. This is a number we could not have dreamed of a decade ago at the time of the economic or financial crisis if we were making projections for the next two years or 2021 and 2022 and about which we are now talking in the presentation of the budgetary documents. The growth of 5.1 per cent forecast for the next year allows for extensive investment in all sectors that have so far been under-resourced. These particularly involve health care, care of the elderly and also investments in digitalisation, knowledge and everything else that can raise Slovenia above the European average in the future.

These funds are significant, but they are not a given fact, and it is necessary to mention certain risks that lie ahead. When referring to the risks to our domestic resources, these particularly arise from vague answers to the question about when an efficient and tested vaccine and/or effective medication for coronavirus will be available to everyone. I cannot offer you an answer to this question even after a lengthy discussion of the European Council at the end of last week at which the European leaders dedicated a lot of time to this issue. We all hope that this will happen as soon as possible, but there is no accurate forecast and some of our partner countries in the European Union are adopting measures applicable until the end of the first six months of 2021, which means that great caution must be observed as the matters of the extent to which and how freely we can proceed with normal life, how freely we can manufacture and, finally, how freely revenue will flow into the state budget each depend on the answer to this question.

So far, the situation regarding these risks looks more optimistic in Slovenia than the European average, but it is worsening because the measures being introduced now, which are less restrictive than those enforced in the spring, are not working. In the event of more severe measures being necessary, which will certainly occur if the current ones are not observed, their effect will certainly be reflected in a drop in production. Certain service sectors will be further affected and that will impact the condition of our economy, society as a whole and, consequently, next year’s revenue.

This is a domestic risk that can be avoided to a great extent and is within our control. Especially in the sense of assessment, responsible conduct and the price paid with regard to the fact that the whole of Europe is effectively undergoing the second wave of COVID-19.

The answer to the question regarding external risks or the risk referring to the European funds, which are or will be available, theoretically, in the following years in a much larger volume than ever before, has two parts. Firstly, it involves the question of whether we will be capable – I speak about Europe as a whole – of adopting all those implementing measures necessary for the funds to become available as of 1 January 2021.

Concerning the recovery instruments, after the European Council reached an agreement on the package in July, it is now necessary to coordinate with the European Parliament and also to vote in this chamber and in the other 26 parliaments of the EU Member States. Speaking plainly, this means that no solution which would in any way significantly differ from what was agreed by all countries this July will be on the table as anyone will be able to block any amendment, not only the European Parliament – about which much has been said – but also national parliaments, in which case delays will occur that can cause significantly more damage than the potentially somewhat reduced or increased resources for certain items of the European Funds.

The second part of the risk regarding additional funds that would provide further oxygen for our speedy recovery and development lies in our hands. In order to be able to not only draw, but productively invest, for example, more than EUR 5.2 billion from the European Funds in the next three years, we have to eliminate in this country a multitude of various bureaucratic barriers, or else these funds will to a great extent merely remain an opportunity. The Government Strategic Council for Debureaucratisation drafted the first extensive package, which will be followed by others. The condition for the European funds to be invested in Slovenia productively and in real time is that the majority of proposals from this package, particularly those referring directly to lengthy procedures, their duplication, unnecessary complications, and decision-making at several levels in complex relations are adopted by the National Assembly in the next six months, or a large amount of these funds will merely remain an opportunity.

The measures adopted so far in the four anti-crisis packages and the measures that are on your desks within the fifth anti-crisis package can already be understood as the first step towards greater resilience and recovery already in 2020. These measures and packages have greatly reduced the negative economic and social consequences of the epidemic relating to the number of jobs preserved. Since we are not looking at drastic numbers of unemployed as we did at the time of the last economic and financial crisis, we can assess that the pressure on social transfers will be lower, significantly lower than this year, and the funds in budgets for 2021 and 2022 earmarked for investment will actually be as anticipated or possibly higher if the macroeconomic indicators of economic growth of 5.1 per cent in 2021 and 3.7 per cent in 2022 are attained.

If comparing the draft budget for 2021 with the budget for 2021, which was adopted in 2019, the year before the epidemic, you will find that more funds are allocated to the majority of headings, particularly development ones, despite the fact that this is the year of crisis and that the greater part of this increase can be attributed to two reasons. One is the fact that we have so far, and are still doing, everything to maintain the health of the economy and society at a level where there will be no drastic falls, as well as maintain our commitment to the aforementioned European resources.

According to official, but not comprehensive data, household savings in Slovenia increased during the epidemic in 2020, which means that there are additionally larger reserves of capital in the hands of Slovenian citizens, which were also significant prior to the current situation. If this capital is invested merely in banks in the form of savings deposits or other forms, which are not profitable for the savers, this is actually a double loss of unused capital for the individual owning it, while these billions – we are speaking about tens of billions – are on the other hand not productively integrated in the strategy of better resilience and development of the country.

One of next year’s challenges for the Government is also to harmonise, examine and propose instruments through which we could exploit this capital or offer people, owners and individuals the opportunity to earmark it for large infrastructure projects or certain other national projects, whereby we could as a country or society achieve these objectives faster while the savers could also profit more from this capital than they are doing today due to the current policy of low or even negative interest rates.

This should be a sufficient explanation of the Memorandum, while the Minister of Finance will provide the numbers. And when you look at the numbers by individual headings for next year, you will see that two optimistic, developmental, socially- and sustainability-oriented and forward-looking documents are before you. The resources anticipated for all development and other policies are realistic and attainable. If neglecting the potential procedural complications of which I spoke with regard to the EU recovery fund, the door to these resources is open to us and it primarily depends on our conduct as to whether the next two years will be a period of fast recovery, building better resilience of society to challenges similar to this year’s epidemic and a new development impetus of Slovenia for the future.

With these words, I also ask everyone to become seriously engaged in the discussion in order to see the entire picture and not only individual headings, so that we can together adopt a high-quality development package of budgetary documents for the next two years which will serve as an encouragement to everyone trying to make these optimistic numbers a reality in these difficult times.

Thank you very much.