Slovak FinMin to strive to maintain healthy public finances

New Finance minister Ladislav Kamenicky (leftist senior ruling party Smer-SD) will strive to ensure that Slovakia continues to enjoy healthy public finances, with both 2019 and 2020 public budgets despite the plans to lift spending amid slowing down economic activity, but also to continue the fight against tax evasion, the minister said on Tuesday at a press conference presenting his priorities on the post. President Andrej Kiska appointed Kamenicky, part of the ruling Smer party’s leadership and previously head of parliament’s budget and finance committee, earlier in the day to succeed Peter Kazimir whom the President appointed NBS’s Governor, effective as of Jun 1. Kamenicky stated that he advocated a well-balanced budget and that he intended to stick with this trend, adding that he also wanted to re-evaluate this year’s budget on a monthly basis. Speaking of the prepared by the coalition new social package of measures, he said he would inquire about the size of the package and the effects it would have on the drafting of the 2020 budget. Note that according to the 2019-2022 Stability Program the government plans a balanced general government budget in the forecast horizon, which is however a step back from the previous plans for a slight surpluses of 0.1% of GDP in 2020 and of 0.3% of GDP in 2021 adopted along with the approval of the 2019 budget. In view of the slowing down economic activity as projected by the central bank (in March it trimmed the GDP growth forecast for 2019 by 0.7pps to 3.5%, for 2020 – by 0.6pps to 3.4% and for 2021 – by 0.2pps to 2.8%) and the finance ministry (in February the finance ministry lowered it forecast for GDP growth in 2019 by 0.5pps to 4.0%, by 0.2pps to 3.7% in 2020 and by 0.1pp to 3.2% in 2021; Kazimir indicated that further downward revision of its current forecasts was possible this summer), and the planned social measures associated with higher spending in the run-up to the general election in 2020, the attainment of the targets for a balanced budget by 2022 seem implausible, in our view.

The new FinMin plans to meet with Financial Administration (FS) President Lenka Wittenbergerova in the foreseeable future and present his expectations, adding that he would make a final decision on who should head the institution only after the first round of talks and analysis of the situation. Kamenicky also plans to continue the Value for Money project and the testing of expenditure caps, but admitted that the expenditure caps would not affect this government as the process is scheduled to last about two-three years.

Main opposition party SaS perceives new FinMin Kamenicky as a fair person who is well-versed in finances, but noted that it remained to be seen whether he would be able to withstand various pressures to be exerted on him. The party doubts the minister would be able to bring any material change in the ten months remaining to the general election. Yet, SaS was strongly critical of the coalition plans for new social package. According to SaS, the ruling coalition is about to commit economic treason, as its signaled tax and allowance measures that will slash public finances. SaS chairperson Richard Sulik stated that the coalition has decided to buy the votes of the public, adding that this was plain, primitive election corruption that would be paid for by the voters.

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