BRATISLAVA, January 27, (WEBNOVINY) — The Slovak Finance Ministry is preparing a second series of austerity measures to stabilize public finances. State Secretary at the finance department Vladimir Tvaroska said that additional measures should help reduce the general government deficit below 3 percent of GDP (the Maastricht criterion) by 2013. The Cabinet definitely must come up with additional measures that will help cut back the deficit to 3 percent of GDP, Tvaroska announced at a conference on the expected macroeconomic development held by the Slovak Chamber of Commerce and Industry (SOPK). On this occasion, the state secretary announced that the ministry will unveil a comprehensive program including measures to reduce public spending in April. The scheme will also contain measures to increase state revenues and tighter rules for public spending. Tvaroska has admitted that all austerity measures are unpleasant but he believes that the additional measures will focus on spending cuts rather than tax and payroll levy hikes. He assumes that the ministry will not have to raise taxes and payroll levies in contrast to the first austerity package.
The state secretary confirmed that the aim to reduce general government deficit this year to 4.9 percent of GDP is realistic. Tvaroska also commented on the ruling of the Constitutional Court that health insurance companies are not obliged to return their profits to the health sector, calling it “discomforting” from the viewpoint of public finances. Other potential court rulings pose some risk to the deficit too.
The ministry will focus on unified collection of taxes, custom duties, and social and health insurance contributions, and completing pension reform, particularly of the first pension pillar to avert an enormous burden for future generations. Director of the Economic Policy Institute, the former State Secretary at the Finance Ministry, Frantisek Palko agrees that the pension system must be reformed. It needs measures that will make the system sustainable. Without reforms, the first pension pillar will pile up pressure on the general government deficit.
SITA