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Sramko: Government Must React More Quickly to Economic Developments
Tuesday 05 January 2010 Zoom in | Print page
Bratislava, January 5 (TASR) - The Government has to react more quickly to economic developments than it did in 2009, outgoing Slovak central bank (NBS) governor Ivan Sramko told TASR on Tuesday, adding that public-finance prognoses should be made more frequently - on a quarterly basis.
According to Sramko, the public-finance deficit for 2009, which is estimated by the Finance Ministry at 6.3 percent of GDP, has only a partially cyclical character conditioned by the economic crisis. The deficit for 2010 is expected to reach 5.5 percent of GDP, which represents state-budget savings reaching €700 million, but Sramko stated that this must be ensured by adopting real and sustainable measures.
"The consolidation is based especially on recovering the income side of public finances and increasing nominal GDP. This is connected to uncertainty, however, and dependent mainly on developments outside Slovakia," said Sramko, adding that active measures on the side of expenditures are also necessary to speed up structural consolidation and ensure the sustainability and long-term character of the savings.
Sramko pointed out that another uncertain factor in this year's state budget is the reliance on unusually fast drawing of EU Funds.
According to NBS head, the most important thing for Slovakia in 2010 is to show that a consolidating budget could be a reality and thus confirm Slovakia's interest in getting the deficit under the 3-percent threshold required by the EU Growth and Stability Pact as soon as possible.
Sramko stressed that adjusting expenditures must have priority over raising taxes, even though such an option can't be completely ruled out either. "Raising taxes should be only approached if the required consolidation speed can't be ensured by cutting expenditures," he said, noting that such moves affect the business environment and could lead to a rising amount of tax fraud.
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