Public finances are overextended. What should the new government do?

Smer leaves budget mines for the new government, including in pensions and taxes.

The parliament passed the 13th pensions only a few days before the February 29 parliamentary election.The parliament passed the 13th pensions only a few days before the February 29 parliamentary election. (Source: TASR)

The new government will take over public finances in problematic condition, say analysts. The outgoing parliament adopted this year’s budget with a deficit of 0.49 percent of GDP, but it is clearly an unrealistic expectation.

The Council for Budget Responsibility predicts the deficit to reach 1.79 percent, which is a difference of nearly €1.3 billion. If the recently adopted 13th pensions are signed into law, the public finances deficit may rise to as much as 2.42 percent.

Related articleFiscal council can criticise, but not halt, the irresponsible spending of public money Read more 

The generous pension system combined with an unflattering demographic situation is not the only factor that turns public finances into a time bomb.

The Index magazine has summed up some significant problems of public finances the government should solve as soon as possible, although its future leaders have said already they do not plan to cancel any social measures adopted by Smer.

Pension system

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