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Parliament Endorses Budgets for 2011, 2012

Ljubljana, 17 November (STA) - The National Assembly passed budget documents for the coming two years on Wednesday despite uncertainty about how a small coalition partner unhappy about plans to save on pensions would vote.

The budget bills for 2011 and 2012 were adopted with an absolute majority of votes, suggesting that either the Pensioners' Party (DeSUS) or part of the opposition had changed its mind on the documents.

In line with the documents, the government deficit will stand at 4.9% next year and be cut to 3.6% in 2012.

To achieve this the government has put in place a series of austerity measures in a special emergency act adopted on Tuesday.

The supplementary budget for 2011 - the original document was adopted already in November last year as part of Slovenia's two-year budgets - reduces revenues by nearly EUR 500m to EUR 8.3bn. Spending is subsequently cut by EUR 360m to just over EUR 10bn.

The savings will be found through slowed indexation in pensions and social transfers, which will be reduced to 25% of standard indexation. The emergency act also curbs public sector pay growth, investments of local government and kindergarten subsidies.

The government had initially proposed a total freeze of pensions and social transfers, but this was modified to allow for 25% indexation in line with a coalition amendment that was endorsed today.

The biggest chunk of spending in 2011, EUR 2.5bn, will go to social security. Krizanic said that this guarantees that in spite of curbed indexation of pensions and social transfers Slovenia will remain a welfare state.

"But to allow Slovenia to remain a welfare state, we must shore up our economy and improve competitiveness," Krizanic added in presenting the documents on Tuesday.

This was echoed by Prime Minister Borut Pahor on Wednesday, who reiterated the importance of reforms for lasting stability. He added that the measures envisaged in the budget "are a step in the right direction".

"If these budget documents are passed, Slovenia will remain in the group of countries that can look at the future with optimism despite the great difficulties facing the EU," he told MPs.

The budget for 2012 forecasts EUR 8.7bn in revenues and spending of EUR 10.1bn.

The government deficit in 2011 is slated to stand at EUR 1.7bn and be reduced to EUR 1.4bn in 2012.

But the opposition reiterated its view that the government could have found additional savings for the next two years in spending not essential for propping up Slovenia's economy.

"This government is spending much more than it is able to collect in taxes," said Democrats (SDS) MP Andrej Vizjak.

To this tune, the People's Party (SLS) entered amendments that would bring an additional EUR 191m in savings in 2011 and EUR 181m in 2012, but both were turned down in the vote.

The National Assembly also adopted the budget implementation act, which allows the state to take out a total of EUR 3.2bn in debt in 2011 budget and EUR 967.7m in 2012 to finance the budget.

Also passed today was a decree on the sale of state property in the coming two years. The government intends to sell 56 properties in 2011 worth an estimated EUR 42m and seven properties in 2012 worth EUR 10m.

Most of the properties that have been earmarked for sale are castles owned by the Ministry of Culture. In the debate on the decree, a number of MPs voiced concern that the castles may be bought by tycoons.

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