The state budget deficit for 2023 is still not known and is likely to be higher than its current figure due mainly to local government investments being taken into account in the final days of the year, though it can still be as much as a percentage point lower than that forecast in the spring, the Ministry of Finance says.
The ministry projects the final state budget deficit for 2023 to be in the range of 2.5 to 3.3 percent of projected GDP.
The ministry says that deficit may be slightly slightly below the projected level by the end of the year, or actually at it – a rapid growth in local government investments to be factored in between now and December 31 mean that the deficit will likely worsen by around €120 million by that time.
This would also follow a pattern seen in previous years.
Ministry spokesperson Irina Satsuta said: "If you take a look at the deepening of the budget deficit in November and December in recent years, this came to 1 percent of GDP in 2021 and 2022, and 1.8 percent of GDP in 2020."
"Based on parallels from previous years, the deficit for this entire year would be 2.5-3.3 percent," she went on.
In October last year, for instance, the budget deficit stood at 0.12 percent of GDP (forecast) yet that figure had risen tenfold to 1.2 percent by the end of 2022.
As of the end of October this year, the state budget deficit stood at 1.5 percent of GDP.
Nonetheless the finance ministry's spring forecast of a budget deficit of 4.3 percent of GDP is not likely to be met, while the summer forecast of 3.3 percent is at the upper limit of the present forecast range.
The expected deepening of the budget deficit will be the result of local government investments, as noted; a mitigating effect in the opposite direction is the fact that the state Health Insurance Fund (Haigekassa) was in a significantly better shape in late October than forecast, due mainly to increased revenues and lower-than-expected expenses on sick leave and specialist medical care.
As of investments including those at local government level Satsuta noted that whereas 56 percent of planned investments were complete by the end of October 2022, at the end of the tenth month this year, the figure was 51 percent.
At the same time, the investment budget had rise by more than €150 million.
"If the investments are made to their planned volume, the deficit of the final months will be larger than that of last year," as Satsuta put it.
With regard to municipal investments, most local governments approve their budgets early on in the year, then procurement tenders are announced – and not awarded and contracts concluded until spring or summer, meaning the actual work tends not to be finished until year-end.
This is particularly relevant when it comes to smaller tasks, whose costs tend to be accounted for once the job is complete, with larger projects costs are factored in in stages.
Editor: Andrew Whyte, Barbara Oja