BRATISLAVA, June 7, (WEBNOVINY) — Finance Minister Ivan Miklos still believes that the general government deficit budgeted at 4.9 percent will be achieved. Fitch Ratings expressed some doubt about this in Monday’s affirmation of Slovakia’s rating, claiming that this year’s general government deficit may reach as much as 5.7 percent of GDP. “I believe that Slovakia will prove that these prognoses were not well-founded and we will do all we can to meet the planned deficit of 4.9 percent of GDP. I believe that ongoing developments are under control. If necessary, we will adopt further measures,” said the minister at the press briefing on Tuesday.
Miklos has admitted that meeting the set goals may not be simple. Risk areas include management of hospitals and missing revenues from the sale of emission allowances that the budget initially counted on but are unlikely to be realized in the planned volume. The minister assessed the overall development of the state budget in the first five months of the year positively.
Next year’s budget counts on further squeezing of the general government deficit to 3.8 percent of GDP. Miklos says that it is still too soon to discuss the budgets of individual ministries, as the budget preparations have only just started, but he stressed that there definitely is space for cuts and savings at every ministry. “There will be plenty of ideas for savings,” said Miklos, adding that for example at the Defense Ministry, a reduction in the number of military bases, joint international tenders for equipment and joint use of some equipment with the Interior Ministry, and discussion of whether it is necessary to have two intelligence agencies at the Defense Ministry may be addressed.
The ministry also suggested expenditure caps on individual budgetary chapters. Following this year’s cuts in wage expenditures by 10 percent, the Cabinet has agreed on further wage freezes next year. Miklos said that the Finance Ministry, Labor Ministry and Interior Ministry have released the most employees to date. The highest number of people were laid off from the Antitrust Office in relative terms, namely over 13 percent, while the Supreme Court has hired the most people.
After the first five months of this year, Slovakia’s state budget deficit is nearly one-quarter lower than a year ago. According to data published by the Finance Ministry, the budget gap was EUR 1.567 billion at the end of May, down 24.6 percent y/y. In monthly terms, the state deepened by EUR 550 million. Behind the improvement of the state budget balance in yearly terms was an 11.1-percent y/y increase in total revenues to EUR 4.396 billion, as well as a moderate decrease in expenditures of 1.2 percent to EUR 5.964 billion.
According to the state budget law adopted by parliament, the state budget should have EUR 13.148 billion in revenues and EUR 16.958 billion in expenses in 2011. The budget deficit is expected to reach EUR 3.81 billion. The deficit of the general government as a whole, including all public institutions, not only the state, should be 4.9 percent of GDP. The government plans to squeeze the deficit to below 3 percent of GDP in 2013.
SITA