18th regular session of the Government of Republic of Slovenia
At today's session, the government approved the budget for 2023-2024. The government aims to ensure stable public finances for the well-being of citizens and to maintain the normal functioning of the economy upon considering the uncertainty and unpredictability of the further development of the energy crisis. Moreover, it has adopted the draft amendment to the Slovenian Sovereign Holding Act, the 2023-2027 Common Agricultural Policy strategic plan for Slovenia and the European Cohesion Policy 2021-2027.
The draft amendment to the Slovenian Sovereign Holding Act proposes solutions to ensure the smooth transfer and management of the assets of the Bank Asset Management Company to the Slovenian Sovereign Holding (SSH). Furthermore, the more transparent governance of state-owned enterprises will be established in line with the highest international corporate governance standards. The SSH corporate governance system will cover the governance of individual state-owned enterprises i.e. DRI, SIDG and Lipica Stud Farm Holding pursuant to the recommendations and guidelines of the Organization for Economic Cooperation and Development for the Corporate Governance of State-Owned Enterprises. The transfer of management functions to the SSH will still ensure the pursuit of all strategic, economic, environmental and social goals set out for individual companies by sectoral legislation; the independence and professionalism of the corporate governance of these companies will be enhanced upon taking into account the proposed solutions laid down in the bill. The staffing of the supervisory authorities of companies governed by the SSH will be more clearly defined with an emphasis on professionalism and competencies; the provisions on compliance management, integrity and transparency will be amended and supplemented. This Act transfers the capital share of Eles in Talum, under the auspices of SSH, to the direct property of the Republic of Slovenia for the purpose of managing the company during the energy crisis.
The 2023-2027 Common Agricultural Policy strategic plan for Slovenia (SN SKP 2023–2027) is a key strategic document of agricultural policy, through which Slovenia seeks to provide long-term food security, green breakthrough and the sustainable development of Slovenian agriculture, the food industry and rural in the next programme period. In the context of food and energy price increases, as well as climate and environmental challenges, the Slovenian strategic plan is essentially focused on sustainable food production throughout the country and increased self-sufficiency with an important emphasis on all areas and all agricultural holdings, irrespective of the size, direction or market orientation. This umbrella orientation responds to the challenges of food security and the environmental-climate challenges that await us. In drawing up the strategic plan, Slovenia followed three umbrella (and nine specific) goals of the CAP, as defined by European legislation - the competitiveness and resilience of the agricultural sector, the protection of nature, the environment and the climate and the harmonious development of the countryside. The SN CAP 2023-2027 provides conditions for resistant and competitive food production and processing, in particular through the conservation of production potential, the extent of agricultural land and the provision of adequate and stable income for agricultural holdings and the more equal position of agricultural producers by eliminating payment entitlements.
The Government of the Republic of Slovenia adopted the European Cohesion Policy Programme 2021-2027 in Slovenia, which sets out the strategy for achieving the following objectives:
- A smarter Europe by promoting innovative and smart economic transformation;
- A greener, low-carbon Europe by promoting clean and fair energy transition, green and blue investment, the circular economy, climate adaptation and risk prevention and management;
- A more connected Europe by enhancing mobility and regional ICT connectivity;
- A more social Europe implementing the European Pillar of Social Rights;
- A Europe closer to its citizens by fostering the sustainable and integrated development of urban, rural and coastal areas and local initiatives;
- Fund for the just transition of both coal regions.
The Government confirms the budgets for 2023 and 2024
Today, the Government confirmed the draft amending budget for 2023 and the draft budget for 2024 with appertaining budget documents. These serve as a response to unpredictable conditions and a mitigation of price increase consequences for households and the business sector, while maintaining the development orientation with a relatively high investment level. The main emphasis is on healthcare, green policies and sustainable development.
The budgets have been drafted in very uncertain conditions and variable macroeconomic circumstances linked to the war in Ukraine and Slovenia’s geopolitical situation, energy crisis, inflation, obstacles in supply chains and the COVID-19 epidemic. Economic growth is expected to slow in the first half of 2023 due to the aggravated conditions, but is predicted to accelerate in 2024.
In these two years, the focus of the economic and budgetary policies will be intertwined with the measures to mitigate price increases and the implementation of structural measures to enhance economic resilience, which will be supported by investments in key fields. The budget’s development orientation is to be preserved with a relatively high investment level supported by the European funds from the Recovery and Resilience Facility to improve preparedness for the challenges of the green and digital transition.
Some EUR 13.38 billion of revenue is planned in 2023, which is 13 per cent more than was planned in the adopted budget for 2023. According to the plans, the expenditure will reach EUR 16.69 billion or 25 per cent more than in the adopted budget. The budget deficit will thus amount to approximately EUR 3.31 billion or 5.3 per cent of the gross domestic product.
As per the budget adopted for this year, the highest expenditure growth in 2023 is planned in:
- intervention programmes and obligations (+ EUR 1.86 billion to EUR 2.24 billion),
- healthcare (+ EUR 335 million to EUR 779 million),
- education and sport (+ EUR 228 million to EUR 2.51 billion),
- social security (+ EUR 195 million to EUR 1.74 billion),
- environmental protection and environmental infrastructure (+ EUR 141 million to EUR 935 million).
Some EUR 13.79 billion of revenue is planned in 2024, which is 3.1 per cent more than in the amending budget for 2023. According to the plans, the expenditure will reach EUR 15.51 billion, which is 7.1 per cent less than in the amending budget for 2023. The budget deficit would thus amount to approximately EUR 1.71 billion or 2.6 per cent of the gross domestic product.
While observing the uncertainty and unpredictability of the further development of the energy crisis, the Government’s objective is to ensure stable public finances for the welfare of citizens and maintain normal operations of the business sector.
The Government also adopted the amendments to the Ordinance on the framework for the preparation of the general government budget for the 2022–2024 period, in the section referring to 2023 and 2024. The European Commission confirmed the further validity of the general escape clause in 2023, which enables a temporary derogation from the fiscal rules. At the national level, the Fiscal Council failed to provide a clear assessment about the fulfilment of conditions for the continuation of the instrument of exceptional circumstances in 2023, but it acknowledged significant uncertainties and shocks in the macroeconomic environment, which justifies the state’s response.
As per the Fiscal Council’s opinion about the conditions met for the existence of special circumstances, the Government raises the upper limit of general government expenditure for 2023 to EUR 30.06 billion by means of the proposed amendments to the Ordinance on the framework for the preparation of the general government budget for the 2022–2024 period. The permitted upper expenditure limit for the 2023 state budget is increasing to EUR 16.70 billion (in cash-flow); EUR 4.34 billion for healthcare (in cash-flow), EUR 7.07 billion for pensions (in cash-flow) and EUR 2.96 billion for local communities. The upper limit of general government expenditure for 2024 will increase to EUR 29.57 billion. The permitted upper expenditure limit for the 2024 state budget will increase to EUR 15.51 billion (in cash-flow); EUR 4.59 billion for healthcare (in cash-flow), EUR 7.58 billion for pensions (in cash-flow) and EUR 2.99 billion for local communities (in cash-flow).
The Government also adopted the draft Implementation of the Republic of Slovenia Budget for 2023 and 2024 Act. The proposed Act determines the lump sum financing in 2023 and 2024 in the amount of EUR 667, which is approximately EUR 20 more than in 2022. The amount of annual allowance for pensioners in 2023 is set at various levels. Those whose pension amounts to EUR 600 and below will receive an annual allowance in the amount of EUR 455 and those whose pension is EUR 1,120 and more will receive EUR 145. The annual allowance will be calculated in accordance with a special formula (- 0.59 x amount of the pension + 809) for those pension recipients whose pension ranges between EUR 600.01 and EUR 1,120.