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Finance Ministry expects deficit below 2 percent in 2016

THE DEFICIT is set to drop in 2016, with the state income from tax and levies to go up and Slovakia’s growth to accelerate next year, according to a Finance Ministry estimates released on April 21 on the outlines of the budget for 2016-18 that is set to be discussed by the government the next day.

(Source: Sme)

Based on the document, the public administration deficit will be 1.93 percent of GDP next year. According to the current estimates, the deficit will further drop to 1.38 percent of GDP in 2017 and to 1.01 percent of GDP in 2018, the TASR newswire reported.

The Finance Ministry would like to see an even bigger reduction. Nevertheless, in order to achieve the level of 0.88 percent of GDP in 2017, the cabinet will need to adopt additional measures that will cost €462.9 million. Another package of measures valued at €435.7 million should curb the deficit to the level of 0.53 percent of GDP in 2018.

The gross public administration debt is predicted to stay below 55 percent of GDP this year, while it should drop to 52.8 percent of GDP next year, going down to 51.9 percent of GDP in 2017 and further to 50.3 percent of GDP in 2018.

As concerns budget revenue from taxes and levies, this should reach €22.6 billion in 2016 and gradually go up to €23.5 billion and to €24.8 billion the following year. The ministry observes in this context that the prognosis for the following years is largely influenced by the macroeconomic development, which is expected to be less favourable in terms of tax and levy collection.

“Higher real economic growth and boosted purchasing power have a positive impact on the income from taxes thanks to higher real salaries. Nevertheless, the influence of low inflation is even higher, as it curbs nominal bases that serve for the calculation of taxes,” reads the document, as quoted by TASR.

In cash terms, overall budget expenditures are foreseen to hit €15.6 billion next year and to go up to nearly €17 billion in 2017, and to €17.5 billion in 2018.

Slovakia’s economic growth is expected to reach 3.6 percent in 2016 and 2017, and 3.7 percent in 2018.

According to the prognosis, the unemployment rate is predicted to fall in the years ahead. The overall unemployment rate should drop to 12.2 percent next year, and to 11.4 percent in 2017.

The growth of consumer prices is foreseen to accelerate gradually - from the level of 1.6 percent in 2016 to 2 percent in 2017.

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