2011 Budget hopes to cut deficit by 2.5%
The four-party coalition reached agreement yesterday evening, 21 September, on how to consolidate the budget for next year.
With a public finance deficit of 7.8% this year, the plan is to reduce the deficit by 2.5% of the GDP next year, by slashing expenses by around EUR 980 million and raking in some EUR 770 million in additional revenues, by measures like increasing the VAT rate from 19% to 20%. Eventually the government wants the deficit to be around 3% in 2013.
On the savings side, public officials will take a 10% salary cut across-the-board and will see their salaries become performance-based. The salaries will then depend on the economic results of the country. PM Iveta Radicova explained that when there’s a deficit, their wages will drop and if there is a surplus, then they will go up.
Radicova pointed out that not all areas would have their budgets cut, like those for motorway construction, employment, flood prevention and so on. The final draft version of the budget should be put before parliament this Friday, 24 September.