Government: Gross debt should peak at 57 percent of GDP in two years

The increase in the level of public-sector debt should come to a halt in 2015, peaking at just below 57 percent of GDP – the level set by a constitutional law on state debt as the maximum deficit before the government is required to submit a balanced state budget.

The increase in the level of public-sector debt should come to a halt in 2015, peaking at just below 57 percent of GDP – the level set by a constitutional law on state debt as the maximum deficit before the government is required to submit a balanced state budget.

According to the current Stability Programme for 2013-16 approved by the government on Wednesday, April 24, the goal of halting debt growth should be facilitated by trimming the deficit at an even faster pace than that required by the European Union. The programme is to be submitted to the European Commission by the end of April.

According to EU rules, the nominal deficit of EU-member state budgets should be lower than 3 percent of GDP, with the structural deficit (net of cyclical and one-off changes) going down by 0.5 percent of GDP year-on-year. The pace should be slightly faster in Slovakia over the next two years – by 0.8 percent and 0.9 percent respectively in terms of the structural deficit, which represents a reduction of 0.3 percent and 0.6 percent in the nominal deficit.

This is the result of the government's attempts to prevent the deficit from overshooting the 57-percent threshold, the Finance Ministry’s Financial Institute Policy director Martin Filko. "According to the planned budgets, the debt in 2015 should culminate at a level of 56.7 percent of GDP," said Filko, adding that the total should begin to go down after that. The reduction should result in the public finance deficit falling from the 2.9 percent targeted this year and 2.6 percent in 2014 to 2 percent in 2015 and to 1.3 percent in 2016. Net of cyclical and one-off influences, the annual deficit should go down from 3.3 percent to 2.5 percent, 1.6 percent and 1.1 percent of GDP.

Source: TASR

Compiled by Zuzana Vilikovská from press reports
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