Slovak News Back to the news
Analysts: Cutting Deficit under 5.5 percent of GDP Impossible This Year
Wednesday 23 June 2010 Zoom in | Print page
Bratislava, June 23 (TASR) - It isn't possible to reach the planned deficit of 5.5 percent of GDP by the end of the year at the current setting of public finance expenditures given the considerable loss in the state incomes, analysts approached by TASR on Wednesday agree.
Outgoing Finance Minister Jan Pociatek admitted earlier on the same day that the deficit will reach almost 7 percent if supplementary measures are not taken.
"Expenses of the state budget – even after taking the financing of the second (private pension) pillar in account – are still by a double-digit figure higher compared to the previous year," UniCredit Bank analyst David Derenik pointed out.
According to Volksbank Slovensko analyst Vladimir Vano, it has been obvious for some time that the development plan for the state deficit at the end of the year was jeopardised. "The fact that meeting 2010's state deficit plan can be a daunting challenge without radical consolidation measures was already clear after the 5-month fulfilment of the state budget," stressed Vano. He pointed out that by the end of May the deficit had reached more than 55 percent of the level planned for the whole year," stressed Vano.
Analysts agree that it is not possible to reduce the deficit from the currently estimated 6.98 percent to 5.5 percent of GDP by the end of the year, as preparing consolidation and austerity measures take time.
Vano claims that reducing the public finance deficit should be the prime priority for the new government, even at the cost of unpopular and tough measures.
Slovenska Sporitelna analyst Michal Musak views reduction of public expenditures as a more agreeable way than raising taxes. "Reducing expenses sets better preconditions for future economic growth and tax incomes," claims Musak.
According to Vano, if a quick consolidation of public finances doesn't take place, the credibility of Slovakia's commitment to get the deficit under 3 percent of GDP in the upcoming years may be severely tested.
All rights reserved. Any publishing or further dissemination of press releases and photographs from TASR's resources without TASR's prior written approval constitutes a violation of the Copyrights Act.
