Cabinet Hails Standard & Poor’s Rating Outlook Upgrade for Slovakia
BRATISLAVA, August 24, (WEBNOVINY) — After international rating agency Standard & Poor’s changed the outlook of Slovakia’s credit rating to positive from stable on Wednesday, Slovak Prime Minister Iveta Radicova welcomed the decision, calling it good news for Slovakia. „It is a confirmation that responsible government policy bears fruit. The government measures aimed at consolidation of public finances and stabilization of the economy are the only way to protect and gradually increase the standard of living of Slovakia’s citizens,” she underscored. Moreover, the rating agency’s decision comes at a time when many eurozone members are facing the opposite situation and their ratings have been downgraded as a result of the complicated debt crisis in the monetary union.
Radicova, sees it as the most important priority to confirm positive expectations and continue measures that support stability of the Slovak economy and creation of new jobs. “We will continue to behave responsibly in approving budgets for the upcoming years; we are prepared to debate a constitutional bill on budgetary responsibility and take all necessary steps,” she said.
Analyst with Volksbank Slovakia Vladimir Vano said that the upgraded rating outlook is a demonstration of the agency’s trust in the Slovak government’s capability to consolidate Slovakia’s public finances. “The reduction of the deficit has to be the foremost priority of Slovak economic policy, although at the cost of painful and unpopular steps,” said the analyst.
The Slovak Finance Ministry hails Standard & Poor’s decision to improve the country’s rating outlook and says it is determined to keep up with its consolidation plans despite the fact that the S&P consolidation forecast is slower. “We welcome the agency’s praise for the recovery efforts of the new government and confirmation of Slovakia’s leadership position within the central European region. The Finance Ministry is not giving up on its plan to squeeze the public finance deficit to 3.8 percent of the GDP already in 2012,” said the ministerial spokesman Martin Jaros.
According to CSOB analyst Marek Gabris, it is natural that with incoming signs of deteriorating economic development in western Europe, questions are being raised on development in Slovakia and achieving objectives of its fiscal consolidation. “I expect the budget to be revised, as also in the standard process it undergoes at least one autumn round when parliamentary committees evaluate it,” he said. Gabris said that the 2013 deficit will depend on the extent of the slowdown and on how eurozone members resolve the debt problem.
In a statement on Wednesday, S&P affirmed Slovakia’s A+/A-1 rating. The agency commented that Slovakia’s „decade-long track record of economic and fiscal reforms, its strong growth potential, and its moderate—though slightly rising—debt burden“ were enough to see potential for an upgrade. The agency added that an upgrade was possible if the country’s high deficit was reduced, as expected, government debt as a share of gross domestic product stabilized, and reforms to the labor market and business environment continued. The administration of Prime Minister Iveta Radicova, in power for 13 months, has pledged to cut the budget deficit to less than 3 percent of gross domestic product by 2013 from about 8 percent in the last two years. The government targets a fiscal deficit of 4.9 percent of GDP in 2011.
SITA