Slovakia aims to loosen consolidation drive to support economic growth

By bne IntelliNews August 15, 2013

The Slovak finance ministry has published a draft budget proposal for 2014-2016, which envisages some loosening from the previously announced consolidation targets with the aim of supporting the sluggish economy, reported. According to the proposal, Slovakia’s budget deficit should reach 2.9% of GDP in 2014, mostly unchanged from this year’s target of 2.94%. The deficit target for next year is still in line with EU’s 3% ceiling, but is above the cabinet’s previous ambition of cutting the shortfall to 2.6% of GDP. The plan envisages also a budget gap of 2.57% of GDP for 2015, up from previously projected 2% of GDP, and a deficit of 1.5% of GDP in 2016, up from previously intended 1.3% of GDP.

Though loosened, the new budget gap targets still need consolidation measures, which the ministry has estimated at more than EUR 700mn for 2014, nearly EUR 1.1bn for 2015 and more than EUR 1.5bn for 2016. Exact measures have not yet been proposed, but the ministry has said that it would target mainly public cost savings.

Slovakia's annual economic growth accelerated to 0.9% in the second quarter of 2013 from a 0.6% yearly rise in the previous three months, but the country’s full-year GDP growth is expected to drop to below 1% this year from 2% in 2012 due to the government’s austerity drive and bleak external demand.

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