Instability of Slovak coalition to freeze reform and policy, suggests Fitch

By bne IntelliNews March 31, 2016

Major changes in Slovakia's economic and fiscal policy are unlikely given the potential instability of the newly formed government, Fitch Ratings suggested in a report issued on March 31.

Slovakia’s new government was formed after four disparate parties agreed to cooperate in the wake of the inconclusive March 5 elections. Analysts have suggested the coalition may not prove stable enough even to last a year, let alone to the end of it’s mandate.

The left/leaning Smer, which lost its parliamentary majority in the vote, signed an agreement to cooperate with the far-right Slovak National Party (SNS), ethnic Hungarian Most-Hid, and pro-business Siet. The deep differences amongst the four, and potential for collapse, makes any progress in reform or major policy moves highly unlikely, the Fitch analysts point out.

“We think this makes major economic structural reforms less likely during the current parliament, as the risk of political instability (and possibly early elections) could limit the scope for major policy steps in contentious areas,: the report reads. "These include tackling regional economic disparities and high structural unemployment, which are weaknesses in Slovakia's sovereign credit profile."

The ratings agency adds that it expects the government deficit to continue to fall gradually over the course of the new parliament, squeezing to 2.2% of GDP this year and 2.1% in 2017, from 2.7% in 2015. Economic growth will be the main driver of the reduction through increased government revenues, the analysts note. 

Fitch expects GDP to expand 3.2% in 2016 and 3% in 2017. Private investment, including a €1.5bn investment by Jaguar Land Rover, will also increase growth potential, the analysts predict.

Related Articles

World Bank forecasts a 0.4% y/y decline in Belarus's GDP for 2017

The Belarusian economy will decline by 0.4% year-on-year in 2017, followed by a modest growth of 0.7% in 2018 and 1.2% in 2019, the World Bank forecasts in its Belarus Economic Update published on ... more

EIB and Belarus sign Framework Cooperation Agreement

The European Investment Bank (EIB) and Belarus inked the Framework Agreement on Cooperation on May 15, which paves the way for the lender to invest up to €200mn in Belarusian projects, the Foreign ... more

Ex-owners of Ukraine's PrivatBank fail to restructure loan portfolio, central bank says

Former owners of Ukraine's biggest state lender PrivatBank, which was nationalised in December, Ihor Kolomoisky and Hennady Bogolyubov, failed to demonstrate progress in the fulfillment of its ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss