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Analyst: It Won't Be Surprise if Public Deficit Reaches 6 percent in 2010
Thursday 22 April 2010 Zoom in | Print page
Bratislava, April 22 (TASR) - Slovakia's public finance deficit reached €4.29 billion last year, or 6.77 percent of GDP, according to recent data published by the Slovak Statistics Office and sent to Eurostat in Brussels.
The deficit exceeded the earlier expectations of 6.3 percent, which was already a revised estimate. The original estimate of 2.1 percent had to be corrected by the Finance Ministry in the scope of last year. By comparison, the deficit stood at 2.3 percent of GDP in 2008.
When quantified, the state expenses grew by more than 10 percent y-o-y, while incomes saw a drop of almost 1.5 percent, noted Postova Banka analyst Eva Sadovska. According to her, this year's deficit should breach the 6-percent threshold, even though the ministry officially counts on reducing the deficit to 5.5 percent. "This won't be easy," Sadovska told TASR, explaining that her view is based on the absence of any major austerity initiatives and that the foreseeable drawing of EU Funds isn't significant enough to make much of a difference this year.
A higher budgetary deficit goes hand-in-hand with the growing state debt, which rose from 27.7 percent in 2008 to 35.7 percent of GDP last year, according to information published on Thursday.
"Inability to keep the debt under control may result in unpopular measures such as raising taxes ... which may not be a good advert for investors," said Sadovska, adding, however, that no European economy avoided raising the state debt last year.
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