BRATISLAVA, November 16, (WEBNOVINY) — Next year’s budgetary deficit of the general government in Slovakia will not be higher than 4.6 percent of gross domestic product (GDP), representatives of four parties of the former ruling coalition agreed on Wednesday. As Prime Minister Iveta Radicova said, they at the same time agreed that the budget would be approved in parliament, which means that Slovakia would avoid a potential provisional budget, i.e. running in accordance with this year’s budget.
“We perceive adoption of the budget as an important stabilization element also from the point of view of credibility of the Slovak Republic,” Prime Minister Iveta Radicova said after Wednesday’s meeting of ruling parties’ leaders. According to the agreement, the budget should thus be passed in the original form without SaS’ requirement to cancel health insurance contribution paid by voluntarily unemployed people and without impacts of laws that have not been approved after the fall of the government. For example, this concerns the tax and payroll levy reform or the tax mix for financing of self-governments.
No new measures should change the budget in parliament as the ruling parties also agreed that no drafts increasing the deficit above the 4.6 percent of GDP would be approved. “The finance minister will have the right of veto in these cases,” the prime minister stated.
At the same time, no proposals will be submitted that were brought to the negotiations by Finance Minister Ivan Miklos to lower the deficit. As he said, this applies to about thirty measures, which might have lowered the deficit to the originally planned level of 3.8 percent of gross domestic product provided they are approved. “It is pointless to talk about them now, as they will not be accomplished,” Radicova said emphasizing they did not push through any measures at the expense of citizens.
Next year’s deficit will be thus built on the prognosis of 1.7-percent economic growth. If it is fulfilled, the deficit would be by 0.8 percent of GDP higher than the original consolidation plan of Radicova’s Cabinet supposed. According to the prime minister, it should not be a problem to observe the commitment for 2013 to push the deficit under 3 percent of GDP determined by the Maastricht Treaty. “It is not something unmanageable,” Radicova said referring to this year’s lowering of the deficit from last year’s nearly eight percent of GDP to 4.9 percent of economy’s performance.
Whether these revised plans are fulfilled will only be seen in 2012. Some relevant institutions, including the European Commission, are more pessimistic than the finance department in their estimations of Slovakia’s economic growth. The commission forecasts that Slovakia will only have a growth of 1.1 percent next year. If these more pessimistic numbers become reality, it would mean another hole in the budget.
SITA