Slovakia’s economic growth is expected to speed up to 1.7% in 2014 from an 0.7% in 2013, Erste Group said in a new CEE outlook published on Jan 2. It noted that the main issue in Slovakia this year will be the ongoing fiscal consolidation and the development of public debt.
In December 2013, the finance ministry said that the budget deficit could fall to 2.6% of GDP in 2014, below the target of 2.9%, as a result of the country’s consolidation efforts. However, Erste noted that the consolidation is done mainly via one-off or temporary measures and, as a consequence, the country is projecting an increase in the structural deficit, which may delay Slovakia’s exit from the EU’s excessive deficit procedure (EDF).
Erste also warned that Slovakia’s public debt may exceed 57% in 2014, which would oblige the government to prepare a balance budget for 2015. Last month, Slovak finance minister Peter Kazimir said he expects the state debt to remain below the constitutional debt ceiling of 57% in 2014, but this will require an active management of the public finances through the year. According to this year’s budget plan, the debt should reach 56.8% of GDP.
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