The Slovak government’s planned measures to improve public finances “should be sufficient” to reduce the euro member’s budget deficit below the European Union’s limit, the International Monetary Fund said.
The scope for further broad spending cuts is limited after the budget shortfall narrowed to 4.8 percent of gross domestic product last year from 8 percent in 2010, Daria Zakharova, the head of the fund’s mission in Slovakia, told reporters today. The measures proposed by the government, which mainly seek to boost tax revenue, are “broadly appropriate,” she said.
The second-poorest euro region member must boost revenue and cut spending by about 1.5 billion euros ($1.9 billion) to trim the budget deficit to meet the limit of 3 percent of GDP by next year at a time when the economy is hurt by the region’s debt crisis. The government wants to increase corporate and personal income taxes as well as introduce special levies for selected industries to collect more revenue.
The Washington-based lender forecast the Slovak economy to grow 2.6 percent this year, one of the fastest in the EU, and 3.5 percent in 2013. The potential spillover of the euro region’s debt crisis is the main risk to the outlook, she said.
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