Foreign agencies who monitor the ability of the Slovak Republic to repay its debts, are slightly anxious. There is more money going out than coming in, and foreign investors wonder if they should lend money. They are guided by the opinions of so-called credit agencies, and these rating agencies raised a warning finger and set a negative outlook for Slovakia.
Tibor Lörincz, a Tatra Banka analyst, says: “The risk is that the rating agencies would worsen Slovakia's rating, which means that Slovakia would borrow more expensively on the financial markets, which means that subsequently the banks would also borrow more expensively, and this consequently means that they would also lend to people more expensively.”
Analysts explain that rating agencies need to see that the government has a clear plan on how to manage the flow of money in the state so that Slovakia's debt is gradually reduced. J&T bank analyst, Stanislav Pánis: “The markets will soon start to think about this and stop being so benevolent towards all the different social packages that were basically not covered by the resources.”
Tibor Lörincz from Tatra Banka again: “It is important for the new finance minister to present some credible plan for the consolidation of public finances during this election period.”
The Finance Ministry sent RTVS a written statement: “We will have to solve the situation, including by introducing real consolidation measures. However, we first define the goals in the government manifesto.”
State revenues are generated by companies and working people, who pay taxes and levies.
The three most influential rating agencies are Standard & Poor’s, Moody’s and Fitch. Their ratings are A+, A2 and A. That sounds positive, but in a system where ‚triple A‘ is considered the best, these marks are only average. Not bad, not great. More significantly, all three agencies describe the outlook for the country’s finances as negative.
(RTVS)
