According to preliminary data, the state budget deficit in the first eight months of the year amounted to EUR 431 million, which is EUR 300 million lower than in the same period last year. The lower deficit is mainly the result of higher revenues, despite the strengthening of growth in “core” spending, but also of lower spending on intervention measures. The end-of-year deficit is estimated to be less than foreseen under the current budget, adopted in October last year (EUR 2,221 million).
Excluding the direct effect of the intervention measures, the deficit amounted to EUR 72 million and was almost the same as in the same period last year. Total expenditure on intervention measures amounted to EUR 370 million, around a quarter less than in the same period last year. This year, EUR 1,244 million is earmarked in the current budget for intervention measures. We estimate that the implementation of intervention measures will also be lower than foreseen.
The growth in “core” expenditure (excluding intervention measures) was 9.0% and slightly higher relative to the same period last year (8.2%), increasing the risks in the event of a reversal of the economic situation.
The direct impact of the proposed tax changes on public finances is expected to be modest. Based on the draft legal acts, the positive impact is expected to be around EUR 8 million. The possible implementation of an increase in excise duties on certain alcoholic beverages would double the impact.
At the end of September, the Government will prepare the draft state budgets for 2025 and 2026 and the first four-year fiscal-structural plan under the reformed EU governance system. It is not yet known whether it will be submitted to the Fiscal Council for assessment and presented to the National Assembly before being sent to the EC. This would increase the transparency and credibility of fiscal planning.