February 7 (SeeNews) - Slovenia's Fiscal Council said that the the government needs to pursue a prudent financial policy because the country is expected to record one of the highest budget deficits in the EU in 2023.
"For this reason, and also because of the uncertain situation on the financial markets, economic policy should, to the greatest extent possible, avoid measures that would further permanently worsen the state of public finances," the independent state body said in a statement on Monday.
Last year's budget deficit was lower than predicted, opening up a relatively large space for action this year but the government should abstain from introducing measures that would lead to an increase in labour costs as part of the announced wage reform in the public sector, the Fiscal Council said.
The government will most likely decide to revise the 2023 state budget later this year, as some larger non-flexible components of the budget have remained underestimated, the Fiscal Council said. It added that it expects the government to prepare the budget revision more realistically in 2023, as last year the deficit was equivalent to 2.4% of gross domestic product (GDP) and was much smaller than predicted by the rebalancing.
In November, the Slovenian parliament approved a revision of the 2023 budget envisaging revenues of 11.84 billion euro ($12.7 billion), 3.3% above the original plan, while expenditures were projected at 13.36 billion euro, 580 million euro less than in the initial version of the budget. The government did not provide data about the planned deficit for 2023 back then.
The Fiscal Council is accountable to Slovenia's parliament. It has three members and its mission is to assess the compliance of the government's fiscal policy with the fiscal rules and EU regulations.
($ = 0.93182 euro)