UPDATE 1-Eurostat ups Slovak deficit, euro entry on track

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BRUSSELS/The European Union's statistics office said on Monday euro candidate Slovakia must include more items in its public finances.

The move is likely to boost the key fiscal deficit, but not derail euro entry plans in the way some analysts had feared.

In a revision of debt and deficit data for all the EU's 27 member states, Eurostat said Slovakia had a deficit of 3.7 percent of gross domestic product last year rather than the previously reported 3.4 percent.

The Slovak Statistics Office added that Eurostat also recommended Slovakia begin including state television and radio in public finances, but there was mention of the debts of the state highway company to the relief of some analysts.

"The decision means that it will be much easier to fulfil the budget criteria in 2007 than previously feared," Gyula Toth, an analyst at UniCredit Markets and Investment Banking, said.

Negotiations between Slovakia and Eurostat, the EU's statistical service, on budget methodology are closely followed by the markets as some investors feared they could lead to a higher deficit and endanger the plan to adopt the euro in 2009.

Slovakia must bring the budget gap below 3 percent this year to qualify, and the Slovak government has said that even with the revision, the shortfall would reach no higher than 2.9 percent this year.

Toth said he estimates the changes will put the shortfall at 2.7 percent of GDP.

The Slovak crown showed only muted reaction to the report. The unit firmed slightly to 33.500 against the euro , comapred with 33.550 earlier in the session.

Eurostat also said that Greece, which revised up its GDP figures for past years, saw its debt-to-GDP ratio fall 9.3 percentage points to 95.3 percent last year.

The downward debt revisions were even bigger at 9.5 percent for 2005, and 9.9 percent for 2004 and 2003.

The Greek budget deficit also fell as a result of the GDP revision and stood at 2.5 percent of gross domestic product last year, 0.1 percentage point lower than previously reported.

[BRATISLAVA/Reuters/Finance.cz]