ECONOMIC BRIEFS

Slovakia must cut public deficit - Deputy PM

Slovakia's 1998 overall public sector deficit reached 6.0% of gross domestic

product in 1998, a level which cannot be sustained, Deputy Prime Minster Ivan Mikloš said on March 4.

"If we do not succeed in lowering the public sector deficit , there are estimates that it will not be possible to finance the deficit," he told a conference in Bratislava.

The government has made cutting the government's budget deficit, estimated at around 5.5% of GDP, its main economic priority. It plans to reduce the deficit to 2.0% of GDP by the end of the year.

The central bank has consistently warned that some of its most important monetary policy priorities - a stable exchange rate and declining interest rates - can only be achieved if the government makes good on its promises.

Mikloš said the government was well aware of its responsibility. "If we do not succeed in lowering the public sector deficit it will show either in the exchange rate or in interest rates," he said.

The Slovak crown was hit by a wave of nervousness just before the government approved its 1999 budget last week but has since stabilised at around 43.6 to the euro. Interbank interest rates were quoted at between 10 and 17% for maturities ranging from overnights to six months on March 4.

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