BRATISLAVA, November 3 (WEBNOVINY) — Forecast slower economic growth will negatively affect Slovakia’s state budget and deepen the deficit by hundreds of millions of euros, Prime Minister Iveta Radicova confirmed on Thursday. She specified that continuation of consolidation efforts at the level the Cabinet originally planned would require additional measures in the volume of EUR 450 million. “We estimate that further economic slowdown would have an additional impact of EUR 450 million,” said Radicova at the meeting of the Parliamentary Committee for European Affairs. The Finance Ministry should publish the latest prognoses of economic growth and estimated tax revenue in the coming days.
The prime minister also observed that given the current situation, it could be difficult to patch this hole in the budget and the originally projected next year’s deficit of 3.8 percent of GDP may be overstepped. “That is a huge sum. I will not do the grand and claim that we will sustain that,” concluded Radicova but added that the Cabinet was open to proposals of new consolidation measures. Given its mandate, however, these measures should result from an agreement in parliament. “I think that this is the topic for an open discussion of the Parliamentary Budget Committee,” she added.
Ministers discussed the budget at the Cabinet session on Wednesday. Speaking to media afterwards, Defense Minister Lubomir Galko (SaS) warned that if all current priorities in the 2012 budget are maintained, the general government deficit next year could reach 4.7 percent GDP.
According to Galko, the Cabinet has yet to discuss potential additional consolidation measures, however, it is not clear whether they could really be adopted. “Of course, we are ready to discuss any austerity measures that could be implemented at individual ministries in the future although a comment that considering the current political constellation it may be difficult to look for some agreement regarding these measures in the Cabinet was voiced,” said Galko on Wednesday.
Bank analysts also consider as realistic the possibility of next year’s budget deficit being similar to that of 2011. They say main reasons are updated slower economic growth prognoses as well as a lack of political will to adopt new consolidation measures.
ING analyst Eduard Hagara says that in order to observe the planned 3.8-percent deficit, the Cabinet would have to adopt saving measures worth 650 million euros. Although Slovenska Sporitelna prognoses are more optimistic, analysts doubt that it would be possible to curb the deficit to 3 percent demanded by the Maastricht Treaty by 2013 according to Cabinet plans.
SITA