Oct. 4 (Bloomberg) -- Slovak political parties are united in supporting a constitutional bill that would impose a cap on state debt as the eastern euro-area country seeks to strengthen public finances.
A multipartisan group of lawmakers will submit legislation to parliament in the capital Bratislava that would trigger an automatic freeze in spending and other sanctions should state debt near 60 percent of gross domestic product, according to a draft bill. The ceiling is set to decline gradually to 50 percent of GDP.
The bill unveiled today by deputies including budget committee head Jozef Kollar, assumes tougher sanctions as debt gets closer to the limit. Should it exceed 57 percent of GDP, the government must prepare a balanced budget, while crossing the limit would result in a confidence motion against the government. Penalties can be avoided in case of a significant recession, a banking-industry bailout and a natural disaster.
The debt crisis that started in Greece last year has spread to other euro-area members, underscoring a need to put public finances of all region’s countries onto a sustainable path. The European Commission forecasts Slovak state debt to reach 45 percent of GDP this year, about half the level for the whole euro region.
--Editors: Douglas Lytle, Andrew Langley
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