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Slovakia in 2013
Radovan Ďurana, INESS
13.8.2013
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Macro
Fiscal issues
Policy papers
Q&A
Macro – w shape, or ww shape?
90
85
80
75
70
65
60
55
50
45
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP nominal
GDP real (2005 prices)
Macro – 2013 down, down
GDP, Annual change
GDP, Annual growth
Source:IFP
Macro
Consumption
Investment
GDP growth
Source: IFP
Change in stock
Net export
Macro – Man on the moon
• Export rulz + 22% between 2008-2012
(Import + 13%, due to low household cons.)
- 83% to EU
- Germany 21%
- Czech Republic 13%
• Industrial production + 13% 2008-2012
Macro – Man on the moon
• Annual growth of employment in division Automotive
production: 3,1% (+ 1 793 workers)
Government spending vs. GDP
14,000
74,000
72,000
12,000
70,000
10,000
68,000
8,000
66,000
6,000
64,000
62,000
4,000
60,000
2,000
58,000
0
56,000
2007
2008
2009
2010
2011
Total government consumption in mil. eur
2012
HDP
Macro – Dark side
in bln. Eur
2008
2012
Change
2008/2012
Car sales
4,0
3,0
-25%
Retail sales
19,8
17,9
-9%
Accomodation
Restaurants,
bars, krčmy
0,4
0,3
-19%
1,1
0,8
-27%
Macro – Dark side
Total lending in bln. eur
Corporate lending in (right axis)
Source: IFP
Macro employment
• Total employment
• Unemployment rate
• Contracts
Macro employment
in ths.
Working
persons
Employed
Economicly
active
2008Q1
2013Q1
2 391,30
2 327,70
2 063,30
1 963,70
2 671,80
2 723,20
Macro - Unemployment
Total unemployment in ths.
15 - 19 years
20 - 24 years
25 - 29 years
30 - 34 years
35 - 39 years
40 - 44 years
45 - 49 years
50 - 54 years
55 - 59 years
Total
Difference
2008Q1 2011Q1 2013Q1 2013/2008
13
14
13
0
41
62
64
23
44
59
68
24
34
50
50
17
30
42
51
21
32
39
36
4
34
36
38
4
35
39
38
4
17
29
35
18
280,5
372,2
395,5
115
Total
population
change
-65
-41
-31
-15
56
3
-13
-31
20
Unemployment rate prediction
2013
14,5
Source: IFP
2014
14,2
2015
13,3
2016
12,5
Wages
Average monthly salary
in 2012
806 Eur
2,5%
Private Sector
804 Eur
2,2%
Public Sector
810 Eur
3,7%
• 10% growth in HC sector = 0,7% of overall
average wage growth (IFP)
Macro – Household Revenues
in. Mil. eur
2008
2012
Change
GDP
66 842
71 463
7%
Gross salaries
25 931
27 717
7%
Social benefits
7 951
10 308
30%
Savings
2 736
5 032
84%
• What is the number of PT jobs in Slovakia?
Contracts
April 2012
Contractors
Contracts
April 2013
516 947
609 530
315 349
398 704
Age distribution of contractors in January 2012, resp. 2013 (Source: IFP)
Fiscal Issues
• 2012 Data
• State Budget in 2013
• Tax Revenues Forecasts
2012 Data
• Lower tax revenues by 0,7 bln. Eur (-1% GDP)
• Consolidation measures 0,3 bln. Eur (0,4%)
• EU Co-financing + contributions – 0,4 bln.eur
(0,5%)
• Municipalities+ SGR exp. Lower by 0,2 bln.
Eur (0,3%)
Revenues of public sector
2 010
2 011
2 012
Annual
change
2012
2 011
mil. Eur
2 012
%GDP
Total revenues
21 281,7 22 961,8 23 660,9
699,0
33,2
33,1
Tax revenues
10 215,2 11 024,4 11 040,9
16,4
16,0
15,4
- Value added tax (without VAT - EU source)
4 128,7
4 651,0
4 248,3
-402,6
6,7
5,9
- Excise Taxes
1 930,8
1 999,1
1 973,3
-25,8
2,9
2,8
- Personal income tax
1 513,9
1 741,4
1 880,0
138,6
2,5
2,6
- Corporate income tax
1 683,0
1 659,4
1 704,0
44,5
2,4
2,4
429,2
474,3
471,6
-2,7
0,7
0,6
Social contributions
8 251,6
8 634,7
9 065,1
430,4
12,5
12,7
Property revenues
812,6
854,1
1 007,2
153,0
1,2
1,4
Dividends + interest
628,0
648,0
834,6
186,5
0,9
1,2
1 374,2
1 800,6
1 713,2
-87,4
2,6
2,4
653,0
793,0
805,4
12,4
1,1
1,1
Other taxes
Grants and transfers
from which EU
Source: Fiscal council
Expenditures of public sector
2 010
2 011
2 012
Annual
change
2012
2 011
mil. Eur
Total expenditures
2 012
%HDP
26 328,7 26 459,5 26 767,7
308,2
38,3
37,5
23 940,8 24 080,0 24 858,4
778,3
34,8
34,8
Employees compensations
5 065,3
4 912,1
5 013,5
101,4
7,1
7,0
Intermediate consumption
3 200,4
3 108,0
3 087,6
-20,3
4,5
4,3
Subsidies
893,5
862,8
993,5
130,7
1,2
1,4
Interest expense
884,8
1 084,4
1 322,1
237,7
1,6
1,9
Social benefits
9 315,5
9 363,8
9 789,6
425,8
13,5
13,7
Health care system
3 481,9
3 392,9
3 501,5
108,6
4,9
4,9
Capital expenditures
2 387,9
2 379,5
1 909,4
-470,1
3,4
2,7
Capital investments
1 680,9
1 462,8
1 326,1
-136,6
2,1
1,9
-5 047,0 -3 497,7 -3 106,9
390,8
-5,1
-4,3
Current expenditures
Deficit
Source: Fiscal council
Primary balance EU 2012
Debt 2012
• From 43,3% GDP to 52,1% GDP
• 52% of the growth – deficit financing
• 30% of the growth – reserves
• 18% of the growth – Eurozone bailout
• Excluding the PICGSS, Slovak debt growth the
highest in EU in 2008- 2012 period
2013 Budget
•
•
•
•
Tax measures
II. Pillar
Banks
Frozen expenditures
In thousands EUR
As of
31.07.2012
As of
31.07.2013
Annually
State budget revenues
6 287 218
6 174 076
-113 142
State budget expenditures
8 525 729
7 799 715
-726 014
1 082 229
849 873
-232 356
786 859
162 411
661 209
130 093
-125 650
-32 318
410 302
509 798
99 496
890 000
420 913
-469 087
5 193 928
5 227 829
33 901
-2 238 511
-1 625 639
612 872
Debt service
EU expenditures
Co- financing
Contributions to the EU, including
reserves
Transfer to Social Insurance
Agency
Other expenditures of state
budget
Deficit of state budget
Tax Revenues Forecasts
Tax revenues in ths. Eur
Reality
2011
Forecast
2012
2013
2014
2015
2016
Direct taxes
3 533 461
3 663 197
3 934 736 4 060 218
4 314 742
4 617 576
Indirect taxes (VAT, Petrol, Tabacco..)
6 709 362
6 295 486
6 189 300 6 264 891
6 180 657
6 406 982
38 739
30 759
27 000
27 540
28 090
22 920
Local taxes
572 719
615 885
632 160
652 857
674 235
696 318
Bank taxes
0
169 922
206 136
154 602
103 068
103 068
73 917
72 375
71 511
70 724
70 088
69 597
4 592 541
4 848 745
5 632 092 5 546 613
5 783 168
6 047 053
0
44 234
0
0
0
2 385 268
2 426 335
2 590 647 2 693 114
2 818 966
2 958 786
17 956 064,0 18 159 809
19 379 992 19 472 100
19 974 555
20 923 841
International trade taxes
Public Broadcasting tax
Social Contributions
-II. Pillar transfer
Health Contributrions
Tax and contributions revenues
Source: Fiscal council, IFP
239 701
Tax Revenues growth
nominal
GDP Nominal growth
0,5%
4,4%
2,6%
4,8%
4,8%
5,4%
Tax Property, not Activity?
8,000,000
7,000,000
Direct taxes
6,000,000
5,000,000
Indirect taxes (VAT, Petrol
tax, Tabacco..)
4,000,000
Local taxes
3,000,000
Social Contributions
2,000,000
Health Contributrions
1,000,000
0
2011
2012
2013
2014
2015
2016
Fiscal responsibility
•
•
•
•
•
Overall situation
Sanctions
Municipalities
Expenditures ceiling
State companies
National Rules
Constitutional Budget Responsibility Law
• Debt break (until 2017 50-60% of GDP)
• expenditures limit (without
specification)
• Rules for self-governments
• Rules of transparency
Laws about budgetary rules
• debt of self-government < 60% of
ordinary income
• Debt service of self- govt debt < 25% of
ordinary income
• Evaluation of state budget
• Terms for submitting proposals
State Budget Law
• Defines incomes, expenditures,
maximum deficit
• expenses can be exceeded by 1% max.
• valid for 1 year
Source: Fiscal council
International rules
Stability and Growth Pact
• deficit < 3% of GDP, debt < 60% HDP
• excessive deficit procedure
• MT objective, consolidation of 0,5% of GDP annualy
• decreasing the debt over 60% of GDP by 1/20 ann.
• Expenditures benchmark
• Semi-automatic sanctions
“Fiscal compact” + 2 pack
• A rule of balanced budget
• Medium-term objective in national legislation
• decreasing the debt over 60% of GDP by 1/20 ann.
• Reviewing EC budget proposal (until 15/10)
• Strengthening supervision on countries with
problems
Council Directive 2011/85/EU (part of Six pack)
• Requirements for the fiscal framework of the
Member States:
• Accounting, statistics, audit, transparency
• Independent predictions, sensitivity scenarios
• Numerical rules, medium-term frameworks
Debt brake sanctions
•
•
•
•
•
debt between 50 – 53% of GDP - MF is sending a written justification of the level of
debt to National Council and proposal for its cut-down
debt between 53 – 55% of GDP – Government submits to National Council proposal of
measures cutting-down the debt
- salaries of members of Government are lowered to the previous year level f
debt between 55 – 57% of GDP – MF will decrease the state budget expenditures
by 3% (exceptions)
- consolidated expenditures of public administration cannot rise nominally (exceptions)
- self-government expenditures cannot annualy increase in nominal terms
debt between 57 – 60% of GDP – Government cannot submit to National Council
proposal of public administration budget with budget deficit
-self-governments are obliged to approve only balanced or surplus budget for the next
year
debt over 60% of GDP – in addition to previous action Government asks National
Council for confidence vote
- sanctions cumulate when debt is over 53% of GDP, e.g. after exceeding the limit of
60% besides the vote of confidence it is necessary also to implement measures
described in previous levels of debt.
But
• Sanctions from 55% of GDP are not applied for
the period of 24 months starting the first day
after the day when the Manifesto of Government
and the vote of confidence were approved
(15/5/2012)
• Sanctions from 55% of GDP are not applied for
the period of 36 months starting the first day of
the month after the month in which: GDP
decreased by 12%, costs related to crisis of
financial sector, catastrophic events, Euro
bailouts + 3% of GDP
Debt brake in time
When will we have debt over 57%?
Debt in bln. Eur GDP nominal
Debt to
GDP
2013*
40431,0
72 600,0
55,7%
2014*
43622,0
77 500,0
56,3%
2015*
46319,0
81 700,0
56,69%
2016*
48204,0
86 300,0
55,9%
Source: Fiscal council, 2013 updated
Sustainability index
Sustainability index decreased from
7,0% of GPD in 2011 to 4,3% in 2012.
It means that to make Slovak debt
sustainable in a long-term period
according to definition of
constitutional law, it is necessary to
constatnly improve the balance of
public finance by 4,3% of GDP.
.
Source: Fiscal council
Future of deficits
• Short term measures turned off, EC predicts
deficit 3,1% v 2014
• Oil measures
• Arctic ice(for how long?)
• Limited capital investmens
• Revenues growing faster than expenditures?
• Nationalization of Health Insurance companies?
• Risks related to ESA 2010 (autumn 2014)
Policy papers
• Decrease Minimum wage to 1 €
• Monitoring of Structural funds
• Investment subsidies
Q&A
?
Resources
• Ministry of Finance (IFP) Macro, Taxes
• Fiscal council
• Statistical office
Radovan Ďurana
www.iness.sk
[email protected]
+421915540395