Parliament Passes Law of the Year, Deficit to Drop to 1.29% of GDP in 2017

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Parliament passes law of the year (photo by TASR)

Bratislava, November 29 (TASR) – The public finance deficit should reach 1.29 percent of GDP in 2017, while it should drop to 0.44 percent in 2018 and switch to a surplus of 0.16 percent in 2019, according to the state budget draft for next year approved by Parliament at its session on Tuesday.

In absolute figures, the public administration deficit should reach €2.017 billion in 2017. The gross public administration debt should gradually decrease down to the level of 49.1 percent of GDP in 2019.

Similar to previous years, the Finance Ministry counts on a budgetary reserve of €100 million. The reserve is intended for ‘rainy days’, or for covering investment projects. A part of this reserve should be used for increasing the salaries of civil and public servants.

MPs also approved some amending proposals by parliamentary committees. They were reacting to legislative measures that are being adopted in the field of taxes and levies. Lower revenues from a levy in the insurance sector has been incorporated in the budget, since a levy will only apply to new policies signed after January 1, 2017. Meanwhile, revenues have been increased as a result of scrapping the ceiling calculation basis in compulsory transfers to health insurance funds and increasing the ceiling in transfers to social funds. The increased revenues were in the amending proposal directed towards the Health Ministry’s chapter for hospital reconstruction (over €70 million) and the Labour, Social Affairs and Family Ministry for implementing laws that are being adopted (almost €31 million).

Parliament also approved an amending proposal by Juraj Blanar (Smer-SD). An additional reserve of €50 million will be created in the health sector for covering potential negative impacts in the sector.

The state budget draft has been based on the prognosis that the Slovak economy should grow by 3.5 percent in 2017.  The Finance Ministry expects the negative impact of Brexit to be compensated by better export productivity in Slovakia. Investment activity should be supported by construction in the automotive industry, as well as resumed growth of public investment.