Bloomberg News

Slovakia to Rework 2012 Budget With Higher Deficit on Economy

November 16, 2011

Nov. 16 (Bloomberg) -- The Slovak government will rework the 2012 budget to anticipate a wider deficit as the deepening economic slowdown makes it impossible to meet the original goal, Prime Minister Iveta Radicova said.

The shortfall next year will reach at most 4.6 percent of gross domestic product, compared with a target of 3.8 percent of GDP approved by the Cabinet last month, said Radicova, who heads a care-taking government in place until early elections in March. The administration has enough support in parliament to pass such a spending plan, she said.

The open Slovak economy is hurt by slowing growth in the euro-region, which may be as low as 0.5 percent, according to the European Commission’s last forecast. Vanishing demand for exports will cut tax revenue in the region’s second-poorest member at a time when European governments struggle to improve public finances as the debt crisis hasn’t stopped spreading.

“We agreed to prepare a budget, which will respond to a worsening economic outlook,” Radicova told journalists today in Bratislava, Slovak capital. “Further cuts would have a serious impact on life of citizens and they would cripple” the economy.

The agreement on the wider deficit next year takes into account the Finance Ministry’s revision of the 2012 economic growth to 1.7 percent from 3.4 percent, on which the original budget was based. Slovakia still remains committed to reduce the fiscal gap below 3 percent of GDP in 2013, Radicova said.

--Editor: Douglas Lytle

To contact the reporter on this story: Radoslav Tomek in Bratislava at rtomek@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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