The deficit is reduced by the slow absorption of state budget investments (Budgetary Traffic Light August 2022)

  • 5. 9. 2022

Secretariat of the Council for Budget Responsibility (SoCBR) estimates General Government Budget (GGB) deficit amounting to EUR 3,8 billion

• SoCBR has slightly decreased the estimated level of GGB deficit in 2022. A positive difference compared to the July forecast amounts to EUR 183 million (0.2 % of GDP). Under the assumption that the government does not take additional measures, the deficit can reach the amount of EUR 3.789 billion (3.5 % of GDP). A positive change in the expected deficit level is due to slower spending of state budget capital expenditures.

• Estimated deviation between the SoCBR’s forecast for GGB deficit in 2022 and approved government budget remains positive and amounts to EUR 1 425 million (1.3 % of GDP), which means that the risk of public deficit rising above the government objective is low. However, development of public finances is still affected by high uncertainty due to a rapid rise in the price level and the war conflict in Ukraine.

• Income from tax revenues and social contributions represent the most significant positive impact on the estimated level of deficit by EUR 1 809 million (1.7 % of GDP). We expect higher budgetary revenues especially from taxes, where high inflation increases the growth of macroeconomic bases compared to budget assumptions (especially labor taxes and VAT).

• Absorption of EU funds and RRP is still lower than previously expected, what is reflected in a low level of co-financing expenditures compared to the budget with a deviation amounting to EUR 278 million (0.3 % of GDP).

• Ministry of Finance of the Slovak Republic (MF SR) published in mid-August an estimate of the deficit in 2022 at the level of EUR 5 187 million (4.9 % of GDP). The deviation of the current SoCBR forecast from the MF SR estimate is positive and amounts to EUR 1 398 million (1.3 % of GDP). This difference results mainly from the slower expected spending of state budget capital expenditures and expenditures on co-financing associated with a drawdown of the EU funds.