Mojmir Mrak of the Ljubljana Economics Faculty: Budget Restructuring Will Be Hard

Maribor, 21 January

"Without changing legislation, it will be impossible to create the conditions facilitating a rise in investments. The rise is necessary for economic growth, which will also be propelled by an effective drawing of EU budgetary funds, stressed Mojmir Mrak of the Ljubljana Economics Faculty.

How do you see Budget Restructuring?

The country will have to do three things to be able to fully use the funds from the EU.
Firstly, it will have to restructure its budget expenditure; secondly, it will have to work out good-quality projects which must facilitate development; and thirdly, secure an effective infrastructure for a smooth flow between the domestic and EU budgets. Budget restructuring, however, will be "politically and economically a rather difficult task". Given that the situation in Slovenia is not dramatic, it will be very difficult to persuade people to tighten their belt.
It will be by no means a disaster for Slovenia if we do not use budgetary funds from Brussels. However, it would be very hard to exceed the trend of 3-4% annual economic growth rates in this case.

Does restructuring budget expenditures mean a nominal cut in expenditures?

Not necessarily. Whether certain groups of expenditure have to be cut nominally, depends primarily on economic growth rates. The higher the growth, the less radical the cuts.
Without changing legislation, it will be impossible to create the conditions facilitating a rise in investments. The rise is necessary for economic growth, which will also be propelled by an effective drawing of EU budgetary funds.
If talks on the EU's next financial perspective close with the figures advocated by the European Commission, Slovenia could count on getting two or three times more from the EU budget after 2007 than in the 2004-2006 period. This means that the volume of Slovenian funds needed for co-financing will have to increase too.

Mojmir Mrak of the Ljubljana Economics Faculty: Budget Restructuring Will Be Hard

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