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Pahor Says No Deficit Reduction This Year

Ljubljana, 13 May (STA) - The government adopted on Thursday guidelines for drafting the supplementary budget for 2010, but decided to keep the budget deficit just under 5% of GDP because its reduction would need drastic cuts in expenditure, Prime Minister Borut Pahor told the press.

He noted after the government session that the cabinet had intended to cut the budget deficit by half a percentage point this year.

"But at the moment this would mean a drastic cut in budget expenditure," Pahor said, adding that the predominant opinion within the government was that interventions in expenses should be more modest.

According to a press release from the government, the main reasons for the proposed supplementary budget are worse macroeconomic projections in comparison with those on which the budget is based, a drop in tax revenues and the EUR 145m loan to Greece this year.

Noting that the government had a clear policy, Pahor said this meant that the budgets for 2011 and 2012 would need to be heavily restructured. "This was not an easy decision, because protests are being announced."

He believes that there are no reasons for protests, as negotiations are under way both with trade unions and students.

With the supplementary budget, the government will make certain cuts in investments but for the time being it will not make interventions in the wages nor rights of public sector employees, according to Pahor.

He believes that a 5% deficit is a sustainable and respectable number. This means that the EU will not take measures against Slovenia, he said, adding that Slovenia had so far dealt with its problems on its own.

In part, the supplementary budget is necessary because of the decision to help Greece, but this will not affect the budget deficit, added the prime minister.

The Finance Ministry will draft instructions for the drafting of the supplementary budget by Monday, while budget users have to draft their financial plans by 28 May.

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