Fico ready to widen Slovak deficit

By bne IntelliNews March 13, 2012

Tim Gosling in Prague -

Slovakia's prime minister-elect, Robert Fico, said in an interview with the daily SME published on March 13 that the 2012 budget deficit is likely to be wider than the outgoing government's target. His words will rattle investors already nervous over his party Smer's possible populist platform.

The Smer leader, whose party won the first ever majority in an election on March 10, told the newspaper that he expects the deficit to reach 5.2% of GDP. The 2012 budget passed by the outgoing coalition had set a target of 4.6%.

Fico said his government will need to "adjust some parameters" of the economic plan for 2012 unless the economy grows faster than projected, reports Bloomberg.

Having forced the snap elections by exploiting a split in the outgoing four-party coalition, Fico then had the casting vote on the 2012 budget, and insisted the coalition water down austerity measures and lower its sights on the deficit target. However, Fico said the new administration would meet an outstanding commitment to squeeze the deficit below 3% in 2013.

Whilst analysts have been expressing concern over economic policy ahead of Smer's election win, the party is also keenly Europhile, and many hope that the debt crisis fight across the Eurozone will help keep Fico's more populist tendencies at bay. However, announcing such a sizable shift in the deficit target before he even gets into office will do little to soothe the nerves.

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