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EC to take disciplinary action against Slovakia over excessive deficit

EUROPEAN Monetary Affairs Commissioner Joaquin Almunia said that eurozone member Slovakia and a number of other countries would face EU disciplinary action this year for overrunning the agreed limit on their public spending deficit, the TASR newswire reported.

EUROPEAN Monetary Affairs Commissioner Joaquin Almunia said that eurozone member Slovakia and a number of other countries would face EU disciplinary action this year for overrunning the agreed limit on their public spending deficit, the TASR newswire reported.

"Before the end of this year, we will launch an excessive deficit procedure against several countries, including Slovakia," Almunia said after a meeting of European Union finance ministers on July 7.

Many countries in the 27-nation EU are struggling with extra spending demands and reduced revenues because of the global economic crisis.

The EU's excessive-deficit procedure can lead to fines for eurozone countries that persistently top the 3-percent cap, or to a freeze in EU aid funds for member states not using the single currency. The commission expects 21 of the EU's 27 countries to have deficits above 3 percent this year.

The Slovak Finance Ministry regards the deficit overshoot as a consequence of the global financial and economic crisis, which has affected not only Slovakia but many other countries as well.

According to EU rules, a country which runs a deficit exceeding the limit has two years to deal with it. Finance Ministry State Secretary Peter Kažimír sees this as too ambitious a plan and has instead spoken about 2012, the Sme daily wrote on July 8.

The Slovak Finance Ministry wants to start reducing the deficit as early as next year.

“It is premature to speak about numbers, but it will be a path of blood and sweat,” Sme quoted Kažimír as saying in Brussels. “This will take place, of course, to the detriment of capital expenses and with certain forceful and strict measures in the government’s spending.”

In his opinion the consolidation will be especially difficult because of the fact that next year will be an election year.

A deficit in Slovakia's public finances of around 6 percent was also mentioned by Slovak Prime Minister Robert Fico on July 4, when he appeared on public broadcaster Slovak Radio. At the same time, the premier promised that the government would as early as next year – although it will be an election year – begin consolidation of the public finances. "I want to guarantee that as early as 2010 our budget deficit will be lower compared to 2009".

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