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Slovaks prepare budget cuts to offset crisis impact
Thu, 6th Nov 2008 15:06
BRATISLAVA, Nov 6 (Reuters) - A slowdown in Slovakia due to the global financial crisis will cut 2009 budget revenue by some 10 billion Slovak crowns ($425 million), the government said on Thursday, adding it would cut costs to meet its fiscal targets.
Prime Minister Robert Fico's cabinet, which won power in 2006 promising to spend more on the poor, approved measures on Thursday designed to mitigate the impact of the crisis on the ex-communist economy that will join the euro zone in January.
Under the package, the finance ministry will prepare spending cuts equal to the expected budget revenue shortfall next year to ensure the cabinet does not breach its ceiling of 1.7 percent of gross domestic product for the fiscal gap.
The cuts, which will account for around 2.4 percent of originally planned expenditure, will not affect the planned welfare spending.
'We cannot allow the crisis to reduce social standards of people in Slovakia, who did not cause the crisis,' Fico said.
He added possible cuts could come in the allocation for the army.
Slovakia has slashed growth forecasts with its central and Eastern European peers as firms face more expensive credit and orders dry up due to the economic contraction in the euro zone -- the market for the majority of the region's exports.
The Slovak government now expects real GDP growth of 4.6 percent next year, compared with an original forecast of 6.5 percent which was used as the basis for the 2009 budget draft.
Even the revised forecast should be one of the highest growth rates in the European Union, the government said. It added the euro adoption will protect Slovakia from a more severe impact of the financial markets turmoil.
The government expects plans to accelerate highway construction will boost GDP growth next year, although tighter lending conditions
may complicate financing of such projects.
Fico said the construction of a 2.8 billion euro nuclear power plant, which started on Monday, will also add to growth.
(Reporting by Peter Laca; editing by Patrick Graham) ($1=23.53 Slovak Crown) Keywords: SLOVAKIA CRISIS/MEASURES
(peter.laca@thomsonreuters.com; +421 2 5341 8402; Reuters Messaging: peter.laca.reuters.com@reuters.net)
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Copyright Thomson Reuters 2008. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Prime Minister Robert Fico's cabinet, which won power in 2006 promising to spend more on the poor, approved measures on Thursday designed to mitigate the impact of the crisis on the ex-communist economy that will join the euro zone in January.
Under the package, the finance ministry will prepare spending cuts equal to the expected budget revenue shortfall next year to ensure the cabinet does not breach its ceiling of 1.7 percent of gross domestic product for the fiscal gap.
The cuts, which will account for around 2.4 percent of originally planned expenditure, will not affect the planned welfare spending.
'We cannot allow the crisis to reduce social standards of people in Slovakia, who did not cause the crisis,' Fico said.
He added possible cuts could come in the allocation for the army.
Slovakia has slashed growth forecasts with its central and Eastern European peers as firms face more expensive credit and orders dry up due to the economic contraction in the euro zone -- the market for the majority of the region's exports.
The Slovak government now expects real GDP growth of 4.6 percent next year, compared with an original forecast of 6.5 percent which was used as the basis for the 2009 budget draft.
Even the revised forecast should be one of the highest growth rates in the European Union, the government said. It added the euro adoption will protect Slovakia from a more severe impact of the financial markets turmoil.
The government expects plans to accelerate highway construction will boost GDP growth next year, although tighter lending conditions
Fico said the construction of a 2.8 billion euro nuclear power plant, which started on Monday, will also add to growth.
(Reporting by Peter Laca; editing by Patrick Graham) ($1=23.53 Slovak Crown) Keywords: SLOVAKIA CRISIS/MEASURES
(peter.laca@thomsonreuters.com; +421 2 5341 8402; Reuters Messaging: peter.laca.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2008. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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