Govt Finalises 2006 and 2007 Budget Bills

Ljubljana, 29 September

The cabinet finalised the budget bills for 2006 and 2007 at Thursday's session. It is now expected to send them to parliament for confirmation.

Budget revenues for 2006 are projected at SIT 1,756.4bn (EUR 7.33bn). With expenditures at SIT 1,857.9bn (EUR 7.76bn), the projected deficit is at 1.4% of GDP, Finance Minister Andrej Bajuk said.
According to Bajuk, the deficit is to shrink to 1.2% of GDP in 2007 on revenues of SIT 1,861.1bn (EUR 7.77bn) and expenditures of 1,954.2bn (EUR 8.16bn).
The finance minister stressed that the budget bills for the next two years take into account the changes to the tax code that the government intends to adopt in the coming days as well as projected economic growth.
Among the most important changes is the gradual phasing out of the payroll tax: the rate is to be cut to 80% of the present rate in 2006, 60% in 2007 and 30% in 2008, until finally being abolished in 2009.
The cut in payroll tax is to reduce state revenues by SIT 18bn (EUR 75.1m) in 2006 and a further SIT 39.3bn (EUR 164m) in 2007, Bajuk told the press.
The two budget bills represent the government's commitment to cut state spending as a share of GDP, Bajuk said. In 2006, state spending is to represent 26.3% of GDP, while it will fall to 26% in 2007, he added.
Bajuk said the government would implement a more frugal staffing policy for the public administration and look to cut material costs.
Moreover, Bajuk revealed that the government was planning to raise the rates of value added tax from the current 20% to 21% and from 8.5% to 9%. There has been no final decision on this yet, but the budgets have been created presuming this change, he explained.
According to him, the government is also looking to rationalise social transfers, something that will be tackled in upcoming legislation.
The budget bills also reflect the goals of the Development Strategy, Bajuk pointed out.
In line with the EU's Lisbon Strategy, the two spending plans envisage a 21% rise in spending on research and technology, a 24.5% increase on measures promoting greater competitiveness, 38.5% more funds for the construction of state roads and a 32.8% increase in health spending.
Meanwhile, Health Minister Andrej Brucan pointed out that the 2006 budget bill sets aside SIT 23bn (EUR 96m) for health, with major increases planned for investment in health infrastructure. The priorities will be the Oncology Institute and the children's clinic in Ljubljana, Brucan said.
Although the Slovenian Motorway Company is set get less money for the construction of motorways, Bajuk said that the company would look to secure more loans, especially from the European Investment Bank (EIB).

Govt Finalises 2006 and 2007 Budget Bills

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