NKU: Budgetary Targets Unrealistic, Government Has to Save

NKU: Budgetary Targets Unrealistic, Government Has to Save

Bratislava, October 11 (TASR) – The Supreme Audit Office (NKU) warned the Government about problems with meeting the state-budget targets and the need to prevent the general government deficit and gross debt from increasing, according to NKU’s report on the state of public finance in the first half of 2019.

The office positively evaluated the labour market, modernisation of university colleges and hospitals, support for young families and care for vulnerable children. In contrast, it views continuing indebtedness of hospitals and insufficient funding for state’s policy holders negatively and criticised the Justice and Transport Ministries.

NKU chairman Karol Mitrik stated that targets defined in the 2019 draft budget are unlikely to be met and that it’s clear today that a 4.5-percent GDP growth target is unachievable. “The Government will have to take measures, such as the freezing of some budgetary expenditures,” stated Mitrik, adding that the general government deficit might reach 1.2 percent of GDP if additional measures fail to be taken.

The general government’s gross debt would thus fall slightly below 48 percent of GDP, which is still outside the boundary of the debt brake’s first sanction zone. “However, budgetary expenditures are growing at a faster pace than incomes with the budgetary deficit reaching almost €1.5 billion by the end of June,” stressed Mitrik, adding that acquisition of military equipment contributed to the deficit the most.

The NKU also sees significant risks in growing hospital debt and insufficient allocation of money for state policyholders. According to the NKU auditors, increase in the Health Ministry’s budget by €90 million doesn’t have to be final.

“Growing hospital debt is a serious issue with the total debt of university and faculty hospitals alone, which are under the Health Ministry’s remit, going up by over €33 million over the first half of this year,” claims the NKU. Auditors also paid attention to the planned construction of the Razsochy hospital in Bratislava, stating that six new modern state-run hospitals could have been constructed for €263 million [the Government’s estimate of the cost of the Razsochy hospital’s construction].

The NKU also criticised non-systemic financing of state-run passenger rail carrier ZSSK Slovensko, as the state annually covers losses from previous periods through budgetary measures. This year the state-covered loss amounts to almost €38 million. The NKU’s analytic section also pointed to the slow renewal and modernisation of court buildings.

In reaction, the Finance Ministry said it has been dealing with the condition of the state budget already since the summer. “The Finance Ministry repeatedly called on all ministries to save and it has been taking measures to eliminate negative impacts on the budgetary development in order to reduce the general government deficit as much as possible,” said the ministry’s press department. The ministry will release further information on Monday (October 14) when the state budget will be on the agenda of the Cabinet session.