Slovakia needs to save about three billion euros in the next three years in order to restore its public finances. Odor’s government has started to publish proposals from which the next government can choose and compile a consolidation package.
The recovery of public finances has not yet become a pre-election topic, the parties do not talk about where savings should be made before the parliamentary elections. However, the composition of the consolidation package can have a major impact on people’s living standards.
The current question in the Expert Panel of Denník E was:
Which measures would you choose so that consolidation does not bring about a significant drop in living standards or a slowdown in economic growth?
They answered: Libor Melioris, Ivan Mikloš, Martin Haluš, Vladimír Baláž, Juraj Šuchta, Renáta Bláhová, Radovan Ďurana, Martin Kahanec, Maroš Ovčarik.
First, a brief selection of answers:
Advice on cutting expenses is more problematic. Economists keep repeating that we should not save on public investments, but this statement is not generally true. In Slovakia, we witnessed massive investments in computerization, for example, which had a negligible benefit for our economy. A stronger involvement of the Value for Money Unit in deciding on the overall investment envelope would probably make sense. (Better Book)
What harms the discussion about reducing the public finance deficit the most is that ordinary people do not consider healthy and sustainable public finances to be important. This is the main reason why even politicians do not consider it important, even more so before elections. Just notice the billboards in the current election campaign. They all promise to help, give away, reduce prices, increase pensions and the like. Everyone wants to destroy, nobody wants to create. (Ivan Mikloš)
Naturally, the state should also save on itself and its officials, but this will not solve the consolidation. Approximately 430,000 people work in the public administration with wage expenses of more than 11 billion euros. However, there are only 13,000 employees of ministries and offices. Releasing 10 percent of them would bring 50 million euros a year out of the several billion needed. (Martin Haluš)
The biggest myth is that the consolidation of public finances can be achieved mainly through savings. Yes, saving is undoubtedly important. But no one has yet become rich from saving alone. Neither Bill Gates nor Warren Buffett got rich by saving pocket money. Much more important is the increase in the income of public finances. And by that I don’t mean raising taxes, but increasing the pace and structure of economic growth. (Vladimir Baláž)
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