SLOVENIA - BUDGET AS THE THEORY OF CONSPIRACY

On its way to EU, Slovenia has faced the problem of expensive money and expensive state

AIM Ljubljana, 29 October, 1997

While the discussion about the budget in the Italian parliament has, not long ago, caused a crisis of the government, Slovenian opposition headed by Janez Jansa, president of the Social Democratic Party, sees plots of the ruling coalition even where there is none. One of these "plots" is allegedly this-year's budget which was adopted just recently, among other because Jansa's party had lodged an interpelletion about the work of the government. When the opposition in this way misses the essence of everything that is happening, as it has happened in this case, it is quite realistic to expect that it is not capable of analyzing its failure (interpelleation was not successful) and that is why it attributed its failure to all sorts of "antidemocratic plots". Unfortunately, in this way the opposition is allowing the ruling coalition (LDS-SLS) to continue to rule with all its mistakes.

Of course, it is not at all normal to be adopting the budget for the current year at its end, but for this year's case of the Slovenian budget, there is a whole series of objective and subjective reasons. Parliamentary elections were held in the end of last year and their results were so complicated that the government managed to be constituted only in spring. The initial debates about the budget began only in mid summer, when the two greatest coalition partners, the Liberal Democracy of Slovenia (LDS) and the Slovenian National Party (SLS) supported by the Democratic Party of Pensioners of Slovenia (DeSUS), managed somehow to agree about the sum of this year's budget of about 737 million tolars (about 8 million German marks). This would mean about 27 million tolars less in the budget and that is why the governor of the National Bank of Slovenia, Dr France Arhar, immediatelly reacted by declaring in a shock that the reduced budget was a step backward and that with such a budget Slovenia could hardly expect to successfully become a member of the European Union.

His declarations are, in fact, a serious criticism of the ruling coalition which is reproached for, on the one hand, talking about stabilization and thrift, and on the other, for criticizing excessive expenses and overestimated value of money. Governor Arhar also warned against the fact that, according to his opinion, Slovenian budget did not include the component of development and reduction of structural discordance. The Governor also warned about the studies of the OECD and the IMF which say that when the state is thrifty, the private sector is also thrifty, and for every dollar saved by the state, 0.9 dollars are saved by the private sector. In the opposite cases, both expenses and taxes increase.

Criticism of the governor of the Bank of Slovenia should partially be observed from the political angle, because it should not be forgotten that Dr. Arhar belongs to the opposition party of Christian Democrats. This was evident from the parliamentary debate on the budget in which stances of prime minister Dr Janez Drnovsek and financial minister Dr Mitja Gaspari on the one side and those of Dr France Arhar on the other were confronted. The prime minister stressed that the government had decided to slow down inflation in the course of this and the beginning of next year, by coordinating price proportions, especially in power sources (oil and its derivatives) and that towards the end of this year it would be possible to make the decisive shift towards European inflation rates. At the same time he listed reasons (political blockade) for the delay in adoption of the budget, but also stressed that preparations of the budget for next year had already begun. The prime minister was supported by the minster of finance Gaspari who denied Arhar's allegations about the lack of the development component of the budget by investments of the state in agriculture, science and technology, as well as interventions in the technical progress of the economy. The governor of the Bank of Slovenia immediately responded. He reminded the government that Slovenia would, in its discussion about the budget, have to take care of provisions of the European Union and Agenda 2000, document in which experts of the EU concluded that Slovenia was an expensive state and that it had to begin with reforms immediately. Slovenia has an excessive inflation rate (although it is still below 10 per cent) and longternm tax rates to enable replacement of the tolar by the euro. Arhar appealed on the government not to hesistate about reduction of inflation.

Although the time needed for coordination of the state budget exceeded all reasonable limits, topics which concerned its adoption mostly missed the essence of the problem: the fact that the extended right to retirement with favourable conditions for it enabled the economy to shift the problem of labour surplus to the pension system. This additionally burdened the state budget. If expansion of state administration is added to this, which was demanded by the European Union due to new duties in preparations for joining the Union, it is clear that the young Slovenian state is nowadays more expensive than six months ago.

Milan Povirk

AIM