Slovakia has to activate mechanisms for reducing state public debt after Eurostat released a report according to which Slovak debt hit a new record of 52.1 percent last year. After a decrease in the previous decade, public debt has been growing steeply since the global economic crisis in 2009. Last year it rose by nearly 9 percentage points. ”I admit that the growth is steep. However, we are happy about such a result as it could have been worse,” said Finance Minister Peter Kažimír. An issue of government bonds with the aim to restore the financial reserve accounted for about one third of the growth of Slovakia’s debt in 2012, according to Kažimír. The country exhausted the reserve in 2011 when it had problems with financing its debt.
Exceeding the value of 50 percent of GDP will activate the law on budget responsibility that took effect in Slovakia over a year ago. Under the law, the finance minister has to submit a report to Parliament in which he should explain the reasons for the debt growth and bring proposals for how to reduce it. It is expected that Kažimír will submit the report at the nearest meeting of Parliament that will be held in May. He did not specify the details of the planned measures. However, the Finance Ministry recently suggested it is considering a cut in welfare benefits paid to Slovaks with higher incomes. Publicdebt is expected to continue growing this year since the growth of deficit is most likely to be faster than the growth of the economy. Budget responsibility council member Ľudovít Odor has said the debt will be tightly below 55 percent at the end of the year. It will thus exceed the level of 53 percent of GDP, which will force the government to adopt a set of measures to cut the debt. If the debt exceeds 55 percent of GDP, a 3-percent freezing of expenditures and budget restrictions for municipalities are to be adopted. ”We will do all we can so as not to exceed the 55 percent level this year,” said the Finance Minister.
