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Prime Minister says a 4-5% budget deficit would be acceptable to EU

A public finance budget deficit of 4-5 percent of GDP would be acceptable to the EU as a temporary exception to the rules of the Maastricht Stability and Growth Pact during the current crisis, Prime Minister Robert Fico said on state-owned Slovak Radio's (SRo) politics show ‘Sobotné Dialógy’ (Saturday Dialogues), adding that Slovakia's public finances should remain within this limit this year, reported the TASR newswire.

A public finance budget deficit of 4-5 percent of GDP would be acceptable to the EU as a temporary exception to the rules of the Maastricht Stability and Growth Pact during the current crisis, Prime Minister Robert Fico said on state-owned Slovak Radio's (SRo) politics show ‘Sobotné Dialógy’ (Saturday Dialogues), adding that Slovakia's public finances should remain within this limit this year, reported the TASR newswire.

“This is a threshold that would be respected in Europe and that wouldn't be regarded as one that would qualify the country for action over an excessive deficit. I'm only concerned that the number of countries that will manage to keep their deficit under this threshold will be so low that we'll be able to count them on the fingers of one hand,” said the PM, adding that a 6-percent deficit would probably exceed the acceptable level, however.

The Finance Ministry currently expects Slovakia's public finance deficit this year to stand at 3.04 percent, but this estimate is still based on a prognosis that economic growth will exceed 2 percent, the TASR newswire wrote. The Slovak central bank (NBS) and the International Monetary Fund (IMF) are currently forecasting that the Slovak economy will shrink by more than 2 percent in 2009.

In order to change the parameters of the state budget, including its deficit, it is necessary to wait until the middle of the year, when economic developments in the first six months will be known, said Fico. Because the government, according to the PM, does not want to adopt anti-crisis measures at the expense of the deficit, it is ready to make further savings on expenditures.

“I think that there are still enough reserves for 10-15 percent cuts. I could speak about a sum of around €1 billion that could be used for support programmes, if they are necessary," said Fico. He added that these cuts will not affect social programmes at all. TASR

Compiled by Zuzana Vilikovská from press reports
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