Slovakia is set to miss its budget- deficit goal this year as slowing growth is reducing government revenue, Moody’s Investors Service said.
“While we expect the government to take further corrective measures to close the gap created by lower-than-budgeted revenue, we believe that fiscal slippage related to the weakening economy will prevent the government from achieving its deficit target,” the ratings company said in note e-mailed today from London.
The export-oriented eastern euro-area member has been hurt by slowing demand its western peers, pushing economic growth to the lowest level since the 2009 recession. The resulting revenue shortfall increases the risk Slovakia will not trim its budget deficit to the targeted level of 3 percent of gross domestic product, Moody’s said.
The ratings company cut its forecast for economic growth this year to 0.9 percent from 1.4 percent, compared with a 1.2 percent prediction by the government. Still, the country’s credit profile remains in line with its current rating of A2, the sixth-best grade, Moody’s said.
The European Commission in February predicted the fiscal gap will reach 3.3 percent this year, 0.3 percentage point above the European Union’s limit. The deficit was a preliminary 4.5 percent of GDP in 2012.
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