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LJUBLJANA, Sept 5 (Reuters) - The euro zone's newest member, Slovenia, expects this year's budget deficit to be 0.6 percent of gross domestic product (GDP), well below a November forecast of 1.5 percent, Finance Minister Andrej Bajuk said on Wednesday.
Bajuk told a news conference the deficit would be lower due to higher than expected tax income and lower public spending.
"The latest data shows that public spending will this year be cut to 44.5 percent of GDP from our November forecast of 45.1 percent," Bajuk said.
In 2006, Slovenia's public spending amounted to 46.3 percent of GDP while budget deficit was at 1.4 percent of GDP.
Bajuk also said public spending would be reduced further in 2008 but gave no further details.
He said high inflation in Slovenia in the past few months, fuelled mainly by a global rise of food and fuel prices, has so far not hurt the country's competitiveness.
"There are no signs that competitiveness would decrease on account of that (inflation) as export is still growing."
Latest figures put export growth in the second quarter at around 10 percent, Bajuk said.
GDP growth in the second quarter would "not be dramatically different" from the first quarter when it rose 7.2 percent year-on-year, well above growth in the euro zone, which Slovenia joined in January.
The Slovenian Statistical Office will publish GDP growth figures for the second quarter on Monday.
Bajuk also said there were no signs that Slovenia's economy was overheating, as suggested by some analysts, and there was no need for significant changes in public finance policy.
He said he expected inflation to calm down in the following months and reach the government's forecast of 3.2 percent year-on-year for 2007.
Slovenia's inflation reached 3.4 percent year-on-year in August and was the highest in the euro zone, where the average was 1.8 percent.