Main Aggregates of the General Government (April EDP reporting), Slovenia, 2015–2018

Revenue growth at 6.3%

In 2018 general government revenue grew at a similar pace as the nominal GDP (6.9%). High year-on-year growth of revenues by EUR 1,178 million (6.3%) was a reflection of the good state of the Slovenian economy, which in 2018 resulted in even higher revenues in the government budget than the year before. Due to the favourable labour market conditions and strong economic growth, the tax revenue was EUR 649 million higher than in 2017: higher than in 2017 was the growth of VAT (8.1%), while revenue from income and wealth tax was higher by 10.2%. Fiscal revenue increased in 2018 by EUR 1,097 million or 7.0%.

Due to sound operation of enterprises in which the Republic of Slovenia owns equity, non-tax revenues from profit sharing also increased (by 20.8%). Government units that are not directly included in government balance also had a positive impact on government revenue. They generated a surplus in the amount of EUR 75 million, which is equivalent to 0.2% of GDP.

All this had a positive impact on the fiscal balance of general government sector in 2018 as the surplus increased by EUR 298 million compared to 2017 (EUR 5.8 million or 0.01% of GDP), which is equivalent to 0.6% of GDP.

Expenditure growth is gradually increasing

Government spending increased further last year, year-on-year growth was 4.7%. Expenditure increased by EUR 881 million, which is significantly higher than in 2017 (1.5% or EUR 273 million).

The largest contribution to expenditure increase is still made by social benefits (3.5%) and by compensation of employees (4.4%). Growth dynamics of both components was similar to 2017. The growth was significantly higher for intermediate consumption (7.0%). Also significantly higher were government GFCF (24.9%) and subsidies (8.6%), which indicate greater impetus of EU funds absorption. In 2018 the government decreased interest expenditure further by 15.0%; it amounted to EUR 911 million or 2.0% of GDP.

Primary expenditure growth, i.e. without interest expenditure, was in 2018 6.0%, which means that primary expenditure increased by EUR 1,042, which is significantly higher than in the previous year (2.5% or EUR 421 million). 

Primary surplus (without interest expenditure) was in 2018 EUR 1,213 million (2.6% GDP). Compare to 2017 primary surplus increased by EUR 137 million.  

Central government generated a surplus

Last year general government was most successful at the central government level (S1311). For the first time since SURS started measuring data according to ESA methodology this subsector had a surplus; the surplus was EUR 358 million. Social security funds ended with minimal surplus of EUR 8 million. Last time that the deficit in this subsector was recorded was in 2016. Local government (municipalities) generated a deficit in the amount of EUR 63 million, which happened for the first time since 2014.

Government debt decreased to 70.1% of GDP

In 2018 consolidated government debt amounted to EUR 32,320 million or 70.1% of GDP, which is 3.9 percentage points less than in 2017. Decrease in government debt expressed as a percentage of GDP is mostly influenced by the nominal growth of GDP. In nominal terms, debt increased by EUR 371 million or 1.2%.

In 2018 Government refinanced matured debt with euro bonds with lower interest rates and carried out a cross-currency EUR-USD liability management transaction (7^th in a row) of buying back bonds denominated in US dollar. Both resulted in a 15.0% decrease in interest expenditure in 2018.

Revision of data

According to the established revision policy, data for 2017 were revised. Data were revised due to regular annual payback for personal income tax which decreased government surplus by EUR 23.2 million. This year’s revision at the end of September will be different from the regular one because of the longer revised period (from 1995 on) and more revision steps. The reason is harmonisation of the data and also harmonisation of the benchmark year among EU Member States.