Slovakia’s public finance deficit reached 2.63 percent of GDP last year, according to the latest figures drawn up by the Slovak Statistics Office (ŠÚ) and the European Union’s Eurostat stats office using new ESA2010 accounting methodology.
The country’s debt in 2013 was measured at 54.6 percent, a little below the threshold of 55 percent that is stipulated in the debt-brake law. It was originally foreseen that the cap would be broken, obliging the government to cut spending and refrain from using its reserves, with certain restrictions imposed on the following year’s budget.
The debt in 2014 isn’t set to exceed the cap either, as it is envisaged to reach 54.94 percent of GDP this year. The deficit should be 2.93 percent of GDP this year, the TASR newswire wrote on October 21.
Slovakia draws up a report on its deficit and debt twice a year and submits it to Eurostat.
The news means that Slovakia can increases expenditures in its state budget for next year, the SITA newswire wrote.
According to the April notification when the new methodology has not been incorporated yet, the debt reached 55.4 percent of GDP and the deficit stood at 2.77 percent of GDP.
A significant change compared to the old methodology is primarily the inclusion of certain actors in the scope of public finances. Based on the new rules, the deficit and debt will be also influenced by the operations of the National Highway Company, Eximbanka, public health insurance companies and the agency for the management of emergency crude oil stocks. However, changes were also made in the calculation of GDP. For the period since 1995, nominal GDP has been increased on average by 1.8 percent for each year. Since such growth of the economy was more significant than methodological growth of debt and deficit, these indicators relative to GDP declined.
Based on these data, it can therefore be expected that the draft general government budget for the next three years will undergo several changes in parliament, Finance Minister Peter Kažimír said after the draft state budget was approved by the cabinet last week.
Originally, the budget was drafted in accordance with the third sanction from the debt brake, without any annual growth of expenditures. Since now, this rule will not apply. Eventually, MPs in parliament may raise spending in individual chapters of the budget. For example, Kažimír spoke about incorporating results of collective bargaining into the budget, especially in education, and the impact of the tax deduction for social and health insurance contributions.
The budgeted general government deficit next year will also probably grow from the current 1.98 percent of GDP. Kažimír says, as quoted by SITA, that he will not allow it to rise higher than the original proposal from August, which was just below 2.5 percent of GDP. Soon, the state budget for 2015 will get its final shape in parliament.
(Source: TASR, SITA)
Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.
22. Oct 2014 at 10:00