Capital expenditures are still low (Budgetary Traffic Light November 2022)

  • 2. 12. 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 October forecast amounts to EUR 63 million (0.1 % of GDP). Under the assumption that the government does not take additional measures, the deficit can reach the amount of EUR 3 772 million (3.5 % of GDP). Month-to-month decreasing of GG deficit is mainly due to expected lower drawdown of capital expenditures by other GG entities.

• Energy prices compensation measures increase the deficit by the amount of EUR 418 million (0.4 % of GDP). Total costs of compensation schemes (including the 14th pension) amount to EUR 731 million (0.4 % of GDP), while SoCBR in accordance with the government’s assumptions expects income from the EU regulation regarding excessive profits in the amount of EUR 313 million.

• Estimated deviation between the SoCBR’s forecast for GGB deficit in 2022 and approved government budget remains positive and amounts to EUR 1 441 million (1.3 % of GDP), which means that the risk of the public deficit level rising above the government objective is low.

• Income from tax revenues and social contributions represent the most significant positive impact on the estimated level of deficit by EUR 1 524 million (1.4 % 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).

• According to the Draft Budgetary Plan for 2023-2025 approved by the government, the deficit in 2022 amounts to EUR 5 398 million (5.0 % of GDP), what exceeds the SoCBR’s forecast by EUR 1 620 million (1.5 % of GDP). The most significant difference is identified in state budget capital expenditures, where the government does not incorporate the slow spending observed during the year.