SLOVAKIA will not need to borrow additional funds to service its debt, the Finance Ministry has said in response to opposition calls for the government to freeze expenditure in the budget for 2014 in light of Slovakia’s debt approaching the third constitutional debt-brake limit, 55 percent.
The opposition Slovak Democratic and Christian Union (SDKÚ) called on Prime Minister Robert Fico to prepare to conform to the debt-brake rules, which state that if the country’s public debt exceeds 55 percent, the government is obliged to submit a budget with zero spending growth for the following year, the SITA newswire reported. The call came after European statistics agency Eurostat published data showing that Slovakia’s public debt stood at 54.9 percent of GDP at the end of the first half of 2013.
“If the government is to act responsibly, then it must prepare a budget alternative with frozen expenditures and tell the public what this means in practice,” SDKÚ leader Pavol Frešo said, as quoted by SITA.
The Finance Ministry reacted by saying that the public debt had been rising because the state had made use of favourable conditions for borrowing money at the beginning of 2013 and stockpiled cash for the whole year.
“The debt is not expected to increase [in the second half of this year]; instead, the opposite is true and stabilisation is expected,” the ministry wrote in a statement quoted by SITA.
The ministry further stressed that investors had expressed their appreciation for the government’s consolidation efforts and budgetary policy by buying Slovak government bonds at their lowest-ever rates. Slovakia had thus significantly saved on debt servicing payments, the ministry said.
Under the current stability programme the Slovak government must send for assessment to Brussels, it plans this year to keep public debt below 55 percent of GDP, with a target of 54.8 percent. In subsequent years, however, debt should rise to over 56 percent and start falling only in 2016, to 55.9 percent of GDP.
29. Jul 2013 at 0:00 | Compiled by Spectator staff