Slovak News Back to the news
NBS: Risks for Slovakia's Financial Stability Persist
Friday 11 December 2009 Zoom in | Print page
Bratislava, December 11 (TASR) - Significant risks persist for Slovakia's financial stability in the medium and long term, as the country's economy is highly sensitive to developments in foreign demand, states the central bank's (NBS) report on Slovakia's financial stability in the first half of 2009, which was released on Friday.
"The crisis has caused a drop in potential GDP in a number of countries. In the short term, fiscal stimuli supported global demand. In the longer term, its (demand's) sustainable growth is questionable, however," states the report.
According to the report, although the financial system in Slovakia functioned in a stable manner during the period concerned, risks vis-a-vis its stability increased considerably. The reason behind these risks was persisting negative external developments, most notably poor foreign demand. The Slovak banking sector thus faced the biggest risks since it was restructured in 2001.
Short-term risks for the Slovak financial sector dropped moderately on the back of signs of revival in global trade and production. "In the medium and long term, however, risks continue to be significant due to uncertainty concerning the sustainability and intensity of the revival in the global economy, but also owing to the impact of the fast-growing domestic public debt," NBS cautions.
The Slovak Government, like those of many other countries, has adopted a series of measures aimed at mitigating the impacts of the economic crisis. However, attempts to stimulate the economy by means of fiscal stimuli eventually clash with the need to secure the long-term sustainability of public finances. "Slovakia's progress in attaining short-term goals in lowering the public-finance deficit was halted," said NBS in reference to the expected deficit of 6.3 percent this year, a figure that is three times higher than the one predicted originally.
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.
