The government adopted the budget rebalancing

Due to favourable trends in public finances, in May the Government adopted a budget rebalance. With the rebalancing of the budget, revenues and expenses were increased by EUR 46.7 million, so that the budget after the rebalancing is at the level of EUR 2.9 billion. The reasons for the budget rebalancing can be explained by the inflow of transfers from the EU in the amount of EUR 30 million to overcome the energy crisis, then higher costs due to the extraordinary parliamentary elections that will be held in June and the need to provide additional financial resources to subsidize the employment of persons with disabilities, as well as some technical corrections. On the one hand, budget revenues were increased by around EUR 215 million, which will affect the reduction of the budget deficit for 2023. Also, it is estimated that the missing funds in the budget will therefore be smaller compared to those projected by the budget law, and it is estimated that the total reduction of the missing funds will be EUR 167 million. However, it is questionable whether the budget rebalancing will actually be adopted, given the political situation in the country. Previously, in March of this year, he made a decision to dissolve the parliament, and the parliament must vote on changes to the budget law and budget rebalancing.
Although positive trends were recorded in the first quarter, there are still significant challenges for public finances in the coming period from the point of view of sustainability. Income growth is primarily stimulated by external factors, such as a higher inflation rate, or administrative factors, such as the decision to reduce excise taxes, transfers for the energy crisis, etc. Also, new borrowing is expected in the next period, considering the projected budget deficit. Even in the case of the adoption of the budget rebalancing, additional borrowing is expected, although the amount of missing funds has been reduced by the rebalancing. The structure of consumption represents an additional challenge, where capital expenditures are projected to be significantly smaller than heavy expenditures. In the first quarter, just over a quarter of capital expenditures were realized.

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