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Finance Ministry: 2014 budget deficit projection increases to 2.93 percent

The Finance Ministry has altered its forecast for the public finance deficit in 2014 - from 2.64 percent of GDP as envisioned in the budget for 2014-16 to 2.93 percent of GDP. The respective document was approved by the government. The latest forecast takes into consideration the ministry’s macroeconomic and tax prognosis from September and incorporates them into the latest available data regarding budget developments. The increase in the deficit can be attributed to negative developments in the budgets of local municipalities, public health insurance and expected results of audits by the European Commission. “Changes in state reporting are another negative factor,” the ministry informed the TASR newswire on September 30. September saw the introduction of a new accounting framework called the European System of National and Regional Accounts (ESA 2010). Conversely, the ministry expects to collect more in taxes and social and health-care levies. The Slovak economy continued to grow at a solid rate in the second quarter of 2014; 2.5 percent year-on-year. “The quarter-on-quarter pace of growth decelerated slightly to 0.6 percent,” reads the ministry report. The growth was mainly propelled by domestic demand which grew at the fastest rate since the outbreak of the crisis in 2008. This also fuelled growth in employment, as the number of working people went up by 1.2 percent year-on-year, squeezing the jobless rate to 13.2 percent in the second quarter of 2014. The average nominal salary rose by 4.8 percent on an annual basis to €857 in the second quarter of the year, with real salaries rising at the same pace thanks to largely unchanged prices. “Real salaries in 2014 will grow at the fastest pace since 2007,” according to the ministry which also expects the average annual inflation to stand at 0.1 percent this year.

The Finance Ministry has altered its forecast for the public finance deficit in 2014 - from 2.64 percent of GDP as envisioned in the budget for 2014-16 to 2.93 percent of GDP. The respective document was approved by the government.

The latest forecast takes into consideration the ministry’s macroeconomic and tax prognosis from September and incorporates them into the latest available data regarding budget developments. The increase in the deficit can be attributed to negative developments in the budgets of local municipalities, public health insurance and expected results of audits by the European Commission.

“Changes in state reporting are another negative factor,” the ministry informed the TASR newswire on September 30. September saw the introduction of a new accounting framework called the European System of National and Regional Accounts (ESA 2010). Conversely, the ministry expects to collect more in taxes and social and health-care levies.

The Slovak economy continued to grow at a solid rate in the second quarter of 2014; 2.5 percent year-on-year. “The quarter-on-quarter pace of growth decelerated slightly to 0.6 percent,” reads the ministry report. The growth was mainly propelled by domestic demand which grew at the fastest rate since the outbreak of the crisis in 2008. This also fuelled growth in employment, as the number of working people went up by 1.2 percent year-on-year, squeezing the jobless rate to 13.2 percent in the second quarter of 2014.

The average nominal salary rose by 4.8 percent on an annual basis to €857 in the second quarter of the year, with real salaries rising at the same pace thanks to largely unchanged prices. “Real salaries in 2014 will grow at the fastest pace since 2007,” according to the ministry which also expects the average annual inflation to stand at 0.1 percent this year.

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