“The implementation further confirms the assessment that the adopted amended state budget is unrealistic,” the Fiscal Council wrote today. They also warned of the risk that the government would not allocate the resources of the interventionist legislation to mitigate the effects of the rising prices and the energy crisis.
The implementation of this year’s budget up to October confirms the Fiscal Council’s assessment that the amended state budget was not adequately adjusted to the unrealistically high regular spending rights set in the budget adopted last October. “The actual realisation of the amendment would mean that, excluding the direct impact of the measures to mitigate the effects of the epidemic and the rising prices, spending would have averaged at around 1.7 billion euros per month in the last two months of the year, which is around 0.8 billion euros more than the average of the first ten months,” they estimate in their latest monthly publication.
According to them, the budget’s implementation to date confirms their assessment that the amendment is unrealistic and did not provide an adequate basis for the preparation of the 2023 and 2024 budget documents. “Moreover, creating so much room for manoeuvre on expenditure also seemingly diminishes the relevance of the otherwise important range of measures adopted after the rebalancing on the final government outturn this year,” they stressed.
They also wrote that a comparison of the outturn so far and the adopted amended budget shows that a deficit of 1.76 billion euros is expected to be realised in the last two months of this year, of which 1.16 billion euros is unrelated to the measures taken to mitigate the effects of the epidemic and the rising prices.
The risk that the government will not spend the money on mitigating the rising prices
The Fiscal Council also assessed that the exit anti-corona legislative package continued the adoption of interventionist legislation that is not necessarily directly linked to the event it is intended to address. “This suggests a risk that even interventionist legislation to mitigate the effects of the drains will contain provisions that are not directly related to the energy crisis,” they warned. “The large budgetary reserve in the 2023 draft budget for drainage measures would thus only be used formally for the intended purpose, while in reality, as during the epidemic, the funds would be used to address other problems, including of a systemic nature, which would put a permanent strain on public finances,” the Fiscal Council pointed out.
According to provisional data, the state budget deficit in the first ten months of this year amounted to 283 million euros, and without the direct impact of the measures to mitigate the effects of the COVID-19 epidemic and the rising prices, the state budget would have had a surplus of 465 million euros. Excluding the direct impact of the epidemic and the rising prices mitigation measures, revenue was 18.2 percent higher year-on-year. Excluding these effects, expenditure was 10.2 percent higher year-on-year. The total volume of the state budget expenditure spent on the anti-corona measures from March 2020 to the end of October this year amounts to 5.47 billion euros, of which 672 million euros were spent in the first ten months of this year. According to the amended state budget, the full year would see a spending of less than 1.1 billion euros on these measures, which means that 415 million euros would be spent by the end of the year, the Fiscal Council said. The direct financial impact on the state budget of the measures taken so far this year to mitigate the effects of the rising prices was estimated at 440 million euros. In the last two months of the year, a little less than 200 million euros is expected to be spent. The total direct impact of all the measures taken so far this year is estimated at around 760 million euros.