Slovakia has significantly improved its long-term sustainability of public finances in a few years. But the government has slacked off in its consolidation efforts and has not fully used the favourable economic development during the last few years to improve its fiscal position, arguing that when the economy thrives, people should feel it too. Economic analysts warn that this poses a threat for the country.
“The government is not using good economic times to create a needed reserve and a more significant reduction of the public debt, but instead an increase of its expenditures,” said Ľubomír Koršňák, macroeconomic analyst of UniCredit Bank Czech Republic and Slovakia, as cited by the Hospodárske Noviny daily.
Analysts warn that the economic situation will be not so favourable forever and that it is nearing its end.
“The idea that we are thriving and that it is necessary to pass it on to people is nice, but when we hand out state revenues within social packages, we will be missing them in the social system during worse times, which will certainly come,” said Koršňák.
Postponed balanced budget
The Slovak government has been postponing its target of a balanced budget. Originally the government planned a balanced budget already for 2018. Now in the Finance Ministry’s stability programme it is planning a balanced budget only for 2020. Experts, however, do not believe that the government will stick to it since the parliamentary election is supposed to take place that year and that the government has already announced a new social package with a price tag between €500 and €600 million.
The Finance Ministry has also increased the public finance deficit for 2019 from the original 0.1 percent of GDP to 0.32 percent.
