BUSINESS IN SHORT

Budget deficit lower than expected

THE DEFICIT of the state budget has fallen to €704.04 million (Sk21.21 billion), a result much better than expected. The government had a planned deficit of €1.06 billion (Sk31.98 billion), reported the ČTK newswire, quoting the Ministry of Finance.

THE DEFICIT of the state budget has fallen to €704.04 million (Sk21.21 billion), a result much better than expected. The government had a planned deficit of €1.06 billion (Sk31.98 billion), reported the ČTK newswire, quoting the Ministry of Finance.

Budget income rose from 2007 by 6 percent to €11.35 billion (Sk342 billion). Expenses rose by only 5 percent to €12.06 billion (Sk363.22 billion). Michal Mušák, an analyst from Slovenská Sporiteľňa, a bank, said that the improving economy of the state in the past months could have been positively influenced mainly by the efforts to adopt the euro. After the switch to the euro on January 1, 2009 he expects the budget deficit to rise and also for the parliamentary elections planned for the next year to have a similar effect.

“The global financial crisis will also have a negative effect on the budget,” Mušák told ČTK.

Slovakia must gradually improve the condition of the state budget. The public deficit was 2.16 percent of economic output in 2007. In 2008 it is currently estimated by the Finance Ministry to be 2.3 percent of GDP which is the percentage also targeted by the law on the state budget.

Originally, the cabinet predicted the deficit would fall this year to 1.7 percent of GDP. However, the global financial crisis is expected to have a negative impact on the growth of the Slovak economy and the 2009 state budget projects a public deficit of 2.08 percent of GDP, ČTK reported.

This year’s budget is the first in history to be planned in euros. Expected income is €13.12 billion (Sk395.25 billion) and expenses are projected to increase to €14.13 billion (Sk425.68 billion). The projected state budget deficit is thus €1.01 billion (Sk30.4 billion).


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