Odor: Minimum Consolidation at 3% of GDP Required Within Four Years

Odor: Minimum Consolidation at 3% of GDP Required Within Four Years
Caretaker Prime Minister Ludovit Odor following Government session on September 20, 2023 (photo by TASR)

Bratislava, September 20 (TASR) - Minimum consolidation of public finances in the next four years is required at 3 percent of GDP or 0.75 percent of GDP annually, even though an optimum figure would be closer to 5 percent of GDP, Prime Minister Ludovit Odor announced after a session of the government on Wednesday.
       Odor added that specific recommendations for the next government as to how to achieve this will be presented by his cabinet within two weeks.
       The Prime Minister pointed out that the European Commission predicts that the Slovak deficit will swell to double the value of the EU average and the worst in the EU - at the level of around 6 percent. This puts long-term sustainability of Slovak public finances at risk and Slovakia is already borrowing money on financial markets under significantly worse conditions than it did last year.
       Because of this, the consolidation of public finances is inevitable, yet it must be carried out smartly. "We need to stretch out the consolidation smartly over time and assemble it from several sources. Put quite simply, it must come through the use of three basic elements: reforms, growth and budget," said Odor.
       If no changes are made to either the expenditure or income sides of the economic policy of the state, Slovakia will see even higher deficits than this year's, warned Finance Minister Michal Horvath. "We're talking deficits to the tune of up to €9-10 billion in the following years. If we went along this trajectory, the debt will balloon to the threshold of 70 percent of GDP by the end of the next electoral term. That's not sustainable for a country such as Slovakia, of course."
       Therefore, the Finance Ministry proposed a plan to reduce the deficit within the next four years gradually to 4.5 percent, 2.6 percent, 2.2 percent and 1.7 percent of GDP.