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2010 Budget Debate Raises Doubts About Investment Cuts

Ljubljana, 02 July (STA) - Opposition as well as some coalition MPs voiced concern over the planned investment cuts as parliament started to debate the supplementary budget for 2010 on Friday. Finance Minister Franc Krizanic on the other hand reiterated that Slovenia was sending a signal to the international community that it had its finances under control.

Although Krizanic noted that investments will continue to be greater than in the past two years despite the cuts in the latest budget - which slashes spending by EUR 600m to EUR 9.9bn and takes the deficit to EUR 1.8bn or around 5% of GDP - MPs, including on the coalition side, fear the cuts may be counterproductive.

Head of the opposition Democrats (SDS) Janez Jansa said that such a supplementary budget was directing Slovenia away from the exit of the crisis.

Radovan Zerjav of the opposition People's Party (SLS) added that the investment cuts planned in transport, health, defence, science etc. were coming at the worst time possible.

While similar concerns were also raised by the coalition Zares and Liberal Democrats (LDS) MPs - especially because of the negative effect on the construction sector, which was hit hard by the crisis - Bojan Kontic of the Social Democrats (SD) echoed Krizanic in saying that the 1.3bn in investment still exceeded last year's figure by EUR 184m.

He also pointed to measures encouraging private investments, including economic diplomacy, which for instance helped builder SCT secure EUR 1bn worth of road construction deals in Libya.

The opposition National Party (SNS) was not swayed by this, announcing it would not back the budget in Tuesday's voting.

Jansa meanwhile suggested that government claims that the cuts would keep the budget deficit at around 5% of GDP were completely unrealistic. According to him, the latest data of the Statistics Office imply that deficit could reach almost 10%.

Zerjav said that a EUR 1.4bn increase in spending compared to 2008 could hardly be labelled as saving, while Jansa added that the government had done too little to increase budget revenues.

Franc Jursa of the coalition Pensioners' Party (DeSUS) picked up on this, voicing his disagreement with the ongoing raising of excise duties, saying this approach would "mostly hit the pockets of the smallest people".

The latest supplementary budget for 2010, adopted by the government on 24 June, mostly focuses on cuts in investment and material expenditure.

Hit hardest are the Transport Ministry with a EUR 180m cut that will impact investment in road and rail infrastructure, the Economy Ministry with a EUR 80.5m cut, and the Health Ministry, whose budget is being slashed by 40% or EUR 49m.

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