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Slovenia Business Week no. 14: Slovenia's Current Deficit at 1.8% of GDP in 2005

Meanwhile, the general government debt amounted to 29.1% of GDP, down 0.4 percentage points year-on-year

Slovenia's general government deficit stood at 1.8% of GDP in 2005, down 0.5 percentage points over the year before. Meanwhile, the general government debt amounted to 29.1% of GDP, down 0.4 percentage points year-on-year, according to early data released by the National Statistical Office.

The statisticians estimate that the deficit would remain level this year at 1.8% of GDP, whereas the debt is projected to increase marginally to 29.8% of GDP, according to the data, which was released on Friday.

This means Slovenia is well within the framework set by the Maastricht criteria for eurozone entry, which set the deficit ceiling at 3% of GDP and debt ceiling at 60% of GDP.

Andrej Flajs, the head of the department for national accounts at the Statistical Office, told the press today that last year was extraordinary in that the budget took on the debt of the social security funds. That way, the state assumed an extra SIT 46bn (EUR 192m) of debt.

Consequently, the social security funds showed a surplus of SIT 52bn (EUR 217m) or 0.8% of GDP. Without the debt assumption, the deficit of the central government would have amounted to 2.1% of GDP instead of the 2.8%.

Another extraordinary development last year was the surplus of the local government: particularly due to disposals of land, the local government level last year generated a surplus of 0.2% of GDP.

The Statistical Office also presented revised figures for the 2000-2004. On average, the deficit was 0.2 percentage points higher over that period. The biggest revision was carried out for 2001, namely from 3.9% to 4.3% of GDP.

Flajs also pointed to the primary deficit, which excludes interest expenditures. It was at 1.2% of GDP in 2000, rising to 1.6% of GDP in 2002 and then plummeting to 0.2% of GDP in 2004. It stood at 0.1% of GDP last year.

According to Fajs, the public finances can be considered as healthy or manageable when primary deficit becomes primary surplus. If the surplus stood at between 0.3% and 0.4% of GDP, it would be easier to counter cyclical trends and stay well clear of the eurozone deficit ceiling.

Source: Slovene Press Agency STA

Author: STA