Public debt close to hitting 55 percent

Slovakia’s debt ratcheted up to 54.9 percent of GDP in the first quarter of 2013, up from 52.1 percent in the first quarter of 2012.

Slovakia’s debt ratcheted up to 54.9 percent of GDP in the first quarter of 2013, up from 52.1 percent in the first quarter of 2012.

According to the current report of the European Union's Statistical Office Eurostat, for the first quarter of this year, the ratio of debt to GDP increased by 2.7 percentage points. The country’s public debt increased by 8.5 percent of GDP year-on-year, the SITA newswire wrote. Slovakia is still one of the EU members with relatively low debt, which remains below the public average in both the eurozone and the EU.

However, the pace at which Slovakia’s debt has been rising in recent months is seen as a cause for concern. In annual terms, the growth of Slovakia’s state debt compared to its economic performance was the sixth fastest in the EU. Only countries facing serious economic problems incurred debt at a faster rate, like Greece, Ireland, Spain, Portugal and Cyprus.

Most of Slovakia's public debt is covered by government-issued securities. The share of GDP was 48.7 percent. The share of other loans to cover the country's public debt accounted for more than 6 percent of GDP. Foreign aid supplied by Slovakia to combat the eurozone debt crisis contributed to the debt by 2.2 percent of GDP. In nominal terms, Slovakia’s public debt amounted to almost €39.4 billion.

In the current stability program, which the Slovak government sent to Brussels for assessment, it plans this year to keep the public debt below 55 percent of GDP, with a target of 54.8 percent. In the following years, however, the debt should rise to over 56 percent and start falling only in 2016, to 55.9 percent of GDP. The limit of 55 percent of GDP is the third limit of the constitutional debt brake, SITA wrote. Exceeding this limit would mean that the Finance Ministry would have to freeze 3 percent of budget expenditures, block the government and the prime minister's reserves, and the cabinet would also have to submit a budget for next year with no annual expenditure growth.

“The growth of debt in the first quarter of 2013 was caused by Slovakia fully covering all of its financial needs for 2013. Due to this fact, we expect the public debt to be stabilised,” the Finance Ministry stated on Monday, July 22. The ministry stressed that the goal of the incumbent government is to reduce the public deficit. “Specific measures have already been incorporated into the 2014-16 public administration budget proposal, particularly cuts in personnel expenditures and the freezing of operational expenditures at the 2013 level”, the ministry stated, as quoted by the TASR newswire. “The government is also drafting another set of measures during the process of budget preparation, which are to be detailed at a later stage.”

(Source: SITA, TASR)
Compiled by Zuzana Vilikovská from press reports
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