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BREAKING NEWS

Deficit expected to shrink next year

NEXT year's state budget is projected to have a deficit of Sk24.218 billion (€717.8 million), according to the first draft of the budget bill released by the Finance Ministry on August 15.
Total state budget revenues for 2008 are projected at Sk345.953 billion and expenditures at Sk370.171 billion, the SITA newswire reported.

NEXT year's state budget is projected to have a deficit of Sk24.218 billion (€717.8 million), according to the first draft of the budget bill released by the Finance Ministry on August 15.

Total state budget revenues for 2008 are projected at Sk345.953 billion and expenditures at Sk370.171 billion, the SITA newswire reported.

This year, the budget is expected to have a deficit of Sk38.386 billion, with revenues of Sk310.472 billion, and Sk348.858 billion in expenditures.

The general government deficit is not expected to exceed 2.3 percent of GDP in 2008, including the impact of the second capitalisation pillar of the pension system.

Next year's public deficit is 0.6 percentage points lower than projections for this year. The projected 2008 public deficit is below the Maastricht criterion of three percent that Slovakia needs to reach in order to adopt the euro.

In absolute numbers, the general government deficit is to reach Sk46.531 billion in 2008. The expected impact of the second pension pillar constitutes Sk26.856 billion of the public deficit, or 1.4 percent of GDP.

The general government revenues are expected to reach Sk659.9 billion, with expenditures of Sk706.4 billion in 2008.

"The level of deficit appears acceptable," Juraj Kotian, an analyst with Slovenská Sporiteľňa, told the Sme daily. "The level at which the ministers keep it will be important."

The European Commission is not thrilled that Slovakia is not making bigger cuts to the deficit at a time of strong growth, Kotian added.

Robert Prega, chief analyst with Tatra Banka, also told Sme there is a room for larger cuts to the deficit.

"However, the budget is already taking political aspects into account," he said. "From this point of view, I evaluate it positively."

Fiscal consolidation is planned continue over the next two years of a three-year budget draft, according to SITA. The ministry has predicted a public deficit of 1.8 percent of the GDP for 2009, and 0.8 percent of the GDP for the next year.


- Marta Ďurianová

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